A bill that would remove a barrier to re-entry into the workforce by early retirees also could be a big win for a senior living sector looking to rebuild its workforce in the wake of the COVID-19 pandemic.
The Senior Citizens’ Freedom to Work Act would repeal the retirement earnings test, removing a barrier to early retirees who would have their Social Security benefits penalized if they returned to the workforce.
The RET reduces the Social Security benefits that early retirees are eligible to receive by almost 50% if they earn more than $21,240 annually. Although that reduction in benefits is returned upon reaching full retirement, many older adults are unaware of that caveat and choose to earn below the income threshold.
“Current law unnecessarily complicates seniors’ right to access the benefits they paid into for the entirety of their careers and must be done away with,” Rep. Greg Murphy, MD, (R-NC) said in a statement. “While certain guardrails are in place to ensure the viability of Social Security and incentivize participation in the workforce, the retirement earnings test does neither and is a bureaucratic hurdle that does more harm than good.”
The change could benefit older adults struggling financially who need to return to the workforce to keep up with inflationary bumps to basic necessities.
A recent report from the Committee for a Responsible Federal Budget reported that without significant changes, Social Security would implement a 23% across-the-bard benefit cut in 2033, when the retirement fund becomes insolvent. That would equate to a $17,400 annual benefits cut for a typical newly retired dual-income couple and would contribute to a sharp rise in poverty among older adults.
“This important legislation will simplify retirement planning, boost needed workforce participation among older Americans and improve the livelihoods of seniors throughout the country,” said Rep. Diana Harshbarger (R-TN), a co-sponsor of the bill, which was introduced earlier this month. A previous version of the bill was introduced in 2021.
By 2040, senior living will have 3 million job openings, part of the 20 million openings in long-term care settings as a whole, escalating the need to recruit and retain workers, according to Argentum’s Workforce Projections for Long-Term Care Sectors report, released this spring.
The senior living industry lost 107,000 jobs between February 2020 and November 2021 due to the COVID-19 pandemic. Between February and May 2020, the combined long-term care sector lost 402,000 jobs, almost 7% of its total employment base, according to Argentum.
