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President Clinton Signs Legislation Expanding Opportunities for America's Senior Citizens
AS A FIRST STEP TOWARDS SOCIAL SECURITY REFORM,
PRESIDENT CLINTON WILL SIGN LEGISLATION EXPANDING OPPORTUNITIES FOR
AMERICAS SENIOR CITIZENS
April 6, 2000
Today President Clinton signs H.R. 5, "Senior Citizens 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
Americas 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outdated retirement earnings test for people above the normal retirement age,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
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
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 Presidents 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 SSAs database. All benefit estimates are based
strictly on input from the users.)