With consumer prices and inflation at 40-year highs and the Social Security cost-of-living adjustment (COLA) lagging, retirees are seeing their benefits stretched to the limit.
Because costs are rising so much quicker than the COLA, many seniors are taking drastic savings measures and scrimping on essentials like food and medicine, according to non-partisan advocacy group The Senior Citizens League (TSCL).
Others have found themselves newly employed, as they attempt to supplement their fixed incomes that buy them less and less in retirement. But employed seniors receiving Social Security benefits need to be careful they don’t pass the earning threshold set by the Social Security Administration’s (SSA) earnings restrictions. For 2022, the Social Security earnings limit is $19,560 and for every $2 you exceed that limit, $1 will be withheld in benefits, per the SSA.
A new bill called the Senior Citizens Inflation Relief Act proposes increasing the amount of money seniors can earn while also receiving Social Security benefits.
The bill was introduced in the House on May 10 by Representative Bill Posey (R-FL), according to Congress.gov. The bill aims “to temporarily increase the monthly exempt amount for 2022 and 2023 for individuals not attaining full retirement age, and for other purposes.”
Retired individuals under full retirement age (67 for those born after 1960) are allowed to earn income subject to Social Security’s Earning Restrictions rules. If they are under their full retirement age, they are allowed to earn $19,560 year, or $1,630 per month, in 2022. Upon reaching the age of full retirement, individuals are no longer subject to those restrictions, states a SmartAsset article.
Posey’s goal is to increase the income limits this year and in 2023 to $2,046.67 a month, or $24,560 a year. This totals to $416.67 more a month that senior citizens can earn to help offset the unrelenting high costs we are witnessing this year.
Speaking to ThinkAdvisor, Mary Johnson, social security and Medicare policy analyst at The Senior Citizens League, said the bill “has an innovative idea for helping younger working Social Security beneficiaries deal with inflation, by allowing them to earn a bit more before their benefits would be reduced by the Social Security earnings restrictions.”
Although considered a long shot to be enacted (GovTrack.us has its chances at 1% right now), the bill is only in the first stage of the legislative process and will most likely be considered by committee next before sent on to the House or Senate.
Intended to support an individual’s pension and savings retirement incomes, Social Security currently replaces about 40% of the average American’s retirement income. And while Social Security keeps more than 7.5 million households out of poverty, according to a 2020 study from the National Institute on Retirement Security, 4 in 10 elderly Americans have the monthly benefit as their sole source of retirement income.
More From GOBankingRates
- Money Expert Rachel Cruze Recommends Buying These 10 Used Cars for Under $10K
- 11 Uncommon Investments That Can Actually Make You A Lot of Money
- 3 Things You Must Do When Your Savings Reach $50,000
- 5 Fastest Ways to Raise Your Credit Score Without a Credit Card