More Security in Social Security : Change in earnings test would keep older productive workers in labor pool

Earning extra money always helps a household budget. But Social Security recipients 65 through 69 years old lose some monthly benefits if their extra income exceeds an archaic earnings test that is badly in need of revision.

The House voted overwhelmingly last week in favor of an amendment to the Older Americans Act that would nearly double the amount of money that these Social Security recipients may earn without losing any of their benefits.

Under current law, the earnings test is $10,200 a year, which was once considered a generous incentive to older workers to retire to make room for new workers. Retirees whose income exceeds that level must take a cut of $1 in Social Security benefits for every $3 of extra money earned over the limit. There is no earnings cap for recipients 70 and older.

The earnings threshold is unnecessarily punitive and unrealistic considering today’s cost of living and changing demographics.

The House’s bill would allow the Social Security earnings test to rise by about $2,000 a year until it reached $20,000 in 1997. That would cost about $3.8 billion.

The Senate recently passed its own measure, which would abolish the earnings limit entirely for Social Security recipients; its cost is estimated at $24 billion. The Senate version goes too far.

Support is strong in both the House and Senate for boosting the earnings limit. The bills now go to a conference committee, which will reconcile differences in the bills and, we hope, avoid the temptation to tinker with other aspects of Social Security.

Punishing Social Security recipients 65 through 69 years old who want or need to work is unfair and discriminatory. Many retirees live on fixed incomes or are feeling pinched because they depend on interest income, which has plummeted with the drop in rates.

Retaining productive--and taxpaying--workers in the labor force should be made easier. If the government does not encourage greater self-sufficiency, these people might otherwise have to depend on other, costly federal and state assistance programs.

Prudent adjustment to the Social Security earnings test is long overdue.