Student's Guide to Landmark Congressional Laws on Social Security and Welfare

By Steven G. Livingston | Go to book overview

21

Senior Citizens' Freedom to
Work Act of 2000

The new century began amidst increasing worries about America's Social Security system. With many projecting the Social Security trust fund would be exhausted within 40 years, for how long would our retirement system be able to support the increasing numbers of Americans who relied upon it? Yet, because of the political risks involved in tackling this problem, it was not this worry but the good news brought by the economic expansion of the 1990s that led to the next revision of the U.S. social insurance system. The boom years had enticed and enabled many senior citizens to reenter the workforce. Once there, many of them encountered a unexpected twist: a reduction in their Social Security benefits.

The original Social Security Act contained an all-or-nothing “earnings test.” Otherwise eligible seniors who continued working did not receive a Social Security check. In 1940, the act was amended to allow retirees to earn up to $14.99 a month and still receive their check. This amendment itself was changed many times over the years, as Congress continually tinkered with the earnings test. In 1950, seniors over the age of 75 were exempted from the test. In 1960, Congress decided that seniors above the earning test limit would see their benefits reduced by only one dollar for every two dollars earned, rather than completely cut off. This was expanded to a dollar for every three earned for those who delayed retirement to age 65. In 1972 the dollar amount of the earnings test was changed to increase with the cost of living. In 1983, the age for the earnings test was reduced to 70. And finally, in 1996, a far more liberal earnings test was imposed: By the year 2003 senior

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