The Social Security Earnings Test: Time for Fundamental Change to Aid the Elderly


One out of every eight Americans receives a substantial part of his income from the Social Security Act’s Old-Age and Survivors Insurance (OASI) program. In fact, OASI payments are the primary source of income for most elderly citizens. Since the proportion of the population dependent on OASI is growing rapidly, it is important that the eligibility requirements for OASI benefits be equitable and related to well-defined goals.

The amount of OASI benefits eligible individuals receive has always been determined by an “earnings” or “retirement” test. This earnings test currently specifies that only those individuals who earn $2760 or less per year may receive full benefits. Earned income above that level reduces benefits proportionately. The earnings test does not apply to individuals aged 72 or older. This creates an unfortunate situation: people aged 72 or older receive benefits regardless of their earnings or other income; younger people receive benefits which are reduced as their earned income increases, but which are unaffected by other income. As a result, some people receive benefits they do not need, while others who need assistance receive reduced benefits. It is toward a resolution of this incongruity that this Note is addressed.

This Note will explain the workings of the present earnings test, and ex-amine the considerations that led to the inclusion of an earnings test in theoriginal Social Security Act. It will then trace the test’s development to the present, analyze the effects of the current test and consider proposals for reform.

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