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President Clinton Signs Legislation Expanding Opportunities for America's Senior Citizens

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National Economic Council


April 6, 2000

Today President Clinton signs H.R. 5, "Senior Citizen's Freedom to Work Act of 2000" into law. In his January 1999 State of the Union Address the President stated that "we should eliminate the limits on what seniors on Social Security can earn." The House and Senate responded to his call, passing unanimous legislation that will usher in a new era of opportunity for America's senior citizens.

  • Eliminating the Retirement Earnings Test for People Above the Normal Retirement Age. Under current law, if seniors continue to work from the normal retirement age (currently 65) to age 70, they can have some of their Social Security benefits withheld. This year, Social Security benefits are reduced $1 for every $3 earned above $17,000. The withheld benefits are then returned, in general with interest, in the form of higher benefits after stopping work, or at age 70. H.R. 5 fully eliminates this confusing and outdated retirement earnings test for people above the normal retirement age, allowing them to keep their full Social Security benefits regardless of their earnings level.


  • 900,000 People Will Benefit This Year. About 900,000 people will benefit from this legislation this year (this includes about 800,000 workers and about 100,000 spouses and dependents). People who have had benefits withheld this year will have them returned in full in their May Social Security checks.

  • Will Encourage More Senior Citizens to Work. This year there are 9.6 million people between the ages of 65 and 69, of which 3.0 million work in Social Security covered employment. By 2030, the number of people in this age group will double to 20.3 million. Eliminating the retirement earnings test will ensure that healthy senior citizens who want to work can work without confusing impediments. This is an important step toward preparing the American economy for the demographic challenge of the baby boom. The most definitive study on the Retirement Earnings Test – by economist Leora Friedberg – found that eliminating the retirement earnings test would cause a 5.3 percent increase in work hours by those affected.

  • Paid For Over the Long Run and Thus a Negligible Effect on Social Security Solvency. Although eliminating the Retirement Earnings Test has a cost over the next decade, in subsequent decades this cost is fully repaid – with interest. According to the Social Security actuaries, eliminating the retirement earnings test will not change the projected exhaustion date for the Social Security trust funds – 2037 – and it has a "negligible" effect on the long-term solvency of Social Security.

President Clinton Has a Fiscally Responsible Plan to Extend the Solvency of Social Security. Eliminating the Retirement Earnings Test will help build bipartisan trust toward working with Congress to extend the life of Social Security. The President believes that more should be done to extend the life of Social Security until the middle of the century and strengthen the benefits for elderly women. The President has proposed a specific plan that would ensure that the benefits of the debt reduction that are due to Social Security are used to extend the life of Social Security and pay down the debt held by the public by 2013:

  • Keeping Social Security surpluses for Social Security. The President proposes to lock away all of the Social Security surplus, a step that would pay down debt and prepare the government, and the Nation, for the retirement of the baby boomers.
  • Social Security solvency and debt reduction transfers. After a decade of debt reduction, the President's plan earmarks the interest savings resulting from this debt reduction to the Social Security Trust Fund. By themselves, these fiscally prudent steps will pay down the government debt, reduce interest payments in the future, and provide resources to extend the solvency of the Social Security trust fund to at least 2054. In contrast, the Republican so-called lockboxes would not extend the life of Social Security by a single day.


New Tools to Help Retirement Planning. The President also announces that Social Security is releasing a new Social Security Retirement Planner. This is an Internet-based application that will allow workers to obtain estimates of their Social Security benefits based on their past and expected future earnings and other plans. Social Security is the foundation for a secure retirement, but for most people a comfortable retirement rests on the three-legged financial stool of Social Security, pensions, and savings. The new financial planner will enable people to take advantage of the tools of the Internet economy to plan their pensions and private savings to ensure that they enjoy a dignified retirement. (Note: to maintain privacy and protect records from unauthorized users, none of the calculators are linked to individual earnings records or any other information in SSA's database. All benefit estimates are based strictly on input from the users.)

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