Congress is looking to repeal a Social Security rule that impacts retirees who are still earning — is it the right move?

Congress is looking to repeal a Social Security rule that impacts retirees who are still earning — is it the right move? Vishesh Raisinghani Mon, September 7, 2026 at 10:30 PM GMT+9 9 min read Getty Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below.

For millions of Americans, signing up for Social Security isn't a chance to exit the workforce but simply an opportunity to add some passive income while still working. It's surprisingly common for beneficiaries to be actively employed while collecting their benefits.

According to research by the Center for Retirement Research at Boston College (1), a whopping 43% of Social Security beneficiaries had combined earnings from work with benefits at some point between 1992 and 2022. In other words, a large swath of older Americans decided that Social Security wasn't enough to enable a full retirement.

Now, Congress is considering scrapping a rule that penalizes this cohort of working beneficiaries.

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In April 2026, Rep. Greg Murphy, R-N.C., and Sen. Rick Scott, R-Fla., introduced the Senior Citizens' Freedom to Work Act (2) to repeal the Retirement Earnings Test (RET) (3), which defers benefits to some people who are below the normal retirement age (NRA) and still earning an income.

For decades, the RET has allowed the Social Security Administration (SSA) to claw back some benefits from individuals who earn above specific thresholds every year (4). In 2026, the threshold is $24,480 for anyone reaching their NRA in 2027 or later. The SSA withholds $1 for every $2 earned above this limit.

For those reaching their NRA in 2026, however, there's a lot more room for income. The threshold is nearly triple — $65,160 — and only $1 for every $3 in income is withheld. As for those above their NRA, there's no limit and no withholdings, which means even a six- or seven-figure salary would have no impact on their benefits.

Critics of this rule, such as Rachel Greszler, a visiting fellow at the Economic Policy Innovation Center, argue that it disincentivizes older Americans who want to remain employed (5).

"The federal government should not penalize older Americans or make it harder for them to remain in the workforce," says Greszler.

Rep. Murphy echoed this sentiment while introducing the new act. "Current law unnecessarily complicates seniors' right to access the benefits they paid into for the entirety of their careers and must be done away with," he said (2).

But some industry experts are warning that repealing this rule could put more pressure on the Social Security trust fund, which is already strained and heading for a 24% cut to all benefits by as early as 2032 (6). So, even if the RET were repealed, a 62-year-old beneficiary who is actively working could keep more of their benefits now but face a drastic cut to them six years down the road.

"If this gets passed, it's another hit to the system. And with the current direction of Social Security, I wouldn't bet against this being one more step toward accelerating its long-term strain," Kevin Thompson, CEO of 9i Capital Group, told Newsweek (7). "At some point, lawmakers need to focus on funding Social Security, not continuing to chip away at it."

Repealing the RET could impact you even if you're young or not working while collecting benefits. This is why it's important to monitor the new proposal and prepare for any outcome by thinking about alternative ways to earn a passive income.

For instance, passive income from rental properties could be a potential backup if benefits are cut in the near future. Rental properties have long been a proven source of steady, passive income for high-net-worth investors. However, the time, effort and costs involved in managing and maintaining multiple properties prevent many from investing.

These days, you can tap into this market by investing in shares of vacation homes or rental properties through real estate platforms like Arrived, letting you own real estate without the burden of mortgages or managing tenants. And you can get started with as little as $100.

Backed by world-class investors like Jeff Bezos, Arrived lets you invest in shares of rental properties across the country. Arrived distributes any rental income generated by properties to investors monthly, allowing you to potentially set up a passive income stream without the extra work that comes with being a landlord of your own rental property.

To get started, simply browse through their selection of vetted properties, each picked for their potential appreciation and income generation.

The best part? For a limited time, when you open an account and add $1,000 or more, Arrived will credit your account with a 1% match.

If you're still working well into your 60s, changes to the RET could make it more important than ever to have money set aside beyond the income from Social Security. Even if repealing the rule means you can collect more of your benefits while working, that extra income today may not solve the bigger problem if the Social Security trust fund faces deeper shortfalls down the road.

That makes having a reliable backup especially valuable. One option could be certificates of deposit (CDs), which allow you to earn interest without exposing your money to the day-to-day swings of the stock market.

CDs typically offer more competitive rates than traditional checking or savings accounts. And unlike a savings account, whose rate can change as the Federal Reserve adjusts monetary policy, a CD generally lets you lock in a fixed rate for a predetermined term. For someone approaching retirement, that predictability can be useful.

If that strategy seems appealing, CD Valet can help you find higher-yield options that work for you, whether you're saving for something soon or building a cushion for the long haul.

CD Valet tracks over 40,000 verified rates from FDIC-insured banks and NCUA-insured credit unions nationwide. Unlike other websites, they show every publicly available rate, ensuring you have a comprehensive view of the market.

Plus, their CD rates are updated continuously, so you can shop, compare and open CDs with ease.

A CD can provide a relatively simple way to earn interest without exposing your hard-earned money to stock market volatility. But if you're looking beyond short- or medium-term savings and want another potential source of predictable retirement income, a fixed annuity is an option to consider.

Here's how it works: You put money into an annuity contract issued by an insurance company, and in return, the insurer may provide a guaranteed fixed interest rate for a specified period. That can give you a more predictable return than you might get from investments whose values rise and fall with the market.

For instance, a fixed annuity from a provider like Gainbridge could help grow retirement savings safely while complementing Social Security and other income sources.

Gainbridge currently offers rates up to 5.45% on annuities. This is more than 3x the national CD average, with built-in principal protection.

Even better, you can withdraw up to 10% of your balance each year with no penalty, and there are no hidden fees or commissions. Terms range from three to 10 years, with a $1,000 minimum to open.

Just answer a few questions to see your guaranteed rate and open an account online in minutes — funding and setup only take a few steps.

If you're struggling to keep up or you're worried about other potential changes to the Social Security system that could impact you, working with an experienced financial planner could ease those concerns. A qualified professional can help keep an eye on any changes that impact your retirement and help you plan around them.

But hiring an advisor can be a lifelong commitment, which might make or break your retirement. That's why finding reliable advisors is crucial.

If you have a portfolio of $250,000 or more, platforms like WiserAdvisor can connect you with vetted professionals who specialize in this kind of planning.

Simply answer a few questions about your savings, retirement timeline and overall investment portfolio. From there, WiserAdvisor reviews its network to match you — for free — with up to three vetted, reputable advisors aligned with your specific needs.

You can then schedule no-obligation consultations with your matches to determine who is the best fit for your long-term goals.

WiserAdvisor is a matching service and does not provide financial advice directly. All matched advisors are third parties, and specific financial results are not guaranteed.

Ultimately, with a professional retirement planner at your side and a few good investment moves, you might be able to bolster your financial security regardless of what happens to Social Security in the near future.

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We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

Center for Retirement Research at Boston College (1); U.S. Congressman Gregory F. Murphy (2); Social Security Administration (3), (4); Economic Policy Innovation Center (5); Fortune (6); Newsweek (7)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.