Newspaper article The Florida Times Union

Social Security Test of Earnings on Ropes

Newspaper article The Florida Times Union

Social Security Test of Earnings on Ropes

Article excerpt

WASHINGTON -- When Bonnie Bachman turned 65 and became eligible to collect Social Security benefits, she faced a dilemma:

She wanted to keep her job as public relations coordinator for the Cheyenne, Wyo., Best Western Hitching Post Inn. The salary meant Bachman, recently widowed, could maintain something close to her old standard of living and pad savings for when she's no longer able to work. But it also meant forfeiting her long-anticipated Social Security check.

The choice was frustrating, but not difficult.

"If I weren't working, it would be a real hardship," said Bachman, now 69.

Lawmakers perennially call for the elimination of the penalty -- known as the earnings test -- that forces the youngest among senior citizens to choose between Social Security benefits and income from work.

But this year, support from President Clinton and the coming government surpluses are improving the chances the earnings test might be wiped off the books.

House Speaker Dennis Hastert, R-Ill., also has made the issue a priority.

Because people are living and staying healthy longer, "the line between retirement and working is blurring," said Social Security Commissioner Kenneth Apfel.

The earnings test affects 870,000 working Americans between the ages of 65 and 69 who earn more than Social Security allows and therefore get a smaller benefit or none at all.

Without a job, many of these people face the prospect of trying to live on a fixed income near the poverty level.

In reality, Social Security benefits withheld under the earnings test are not lost -- just delayed.

After people do retire fully -- or once they reach age 70, when the penalty no longer applies -- their monthly benefits are adjusted upward to compensate for the losses.

That can create a positive side effect, says former congressional economist Wendell Primus: People who continue working lock in higher Social Security benefits for later, when they or a surviving spouse will need them most. …

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