SOCIAL SECURITY ADMINISTRATION BALTIMORE, MD 21235-0001

SOCIAL SECURITY

Office of the Chief Actuary

May 14, 2019

The Honorable Jackie Walorski

United States House of Representatives

Washington, D.C. 20510

Dear Representative Walorski:

Enactment of H.R. 2663, the “Senior Citizens’ Freedom to Work Act of 2019”, which you 

reintroduced on May 10, 2019, would eliminate the retirement earnings test (RET) applicable for 

reducing OASDI benefits based on earnings paid in 2020 and later. The initial effect of the 

proposal would be almost entirely additional benefit payments for individuals who, under current 

law, would have their benefits reduced or would have chosen to start benefits later. However, 

most individuals who would receive additional benefits under their NRA due to the elimination 

of the RET would, as a result, receive a permanent reduction in their monthly benefit level that 

would, on average, more than offset the value of the additional benefits over the course of their 

remaining lifetime. Therefore, over the long-range projection period, enactment of the proposal 

would reduce OASDI cost. We estimate that elimination of the RET as proposed would reduce 

(improve) the long-range OASDI actuarial deficit by 0.03 percent of taxable payroll, and would 

reduce the annual deficit for the OASDI program by about 0.11 percent of payroll for 2093. 

Table 1, enclosed, presents annual and 75-year-summarized cost rates, income rates, balances, 

and changes in annual balances for the OASDI program under the proposal. The estimates 

presented here are based on the intermediate assumptions of the 2019 Trustees Report and reflect 

the combined effort of many in the Office of the Chief Actuary, but most particularly Karen 

Glenn, Chris Chaplain, Daniel Nickerson, and Kyle Burkhalter.

Background

Under current law, OASDI beneficiaries who have not yet reached their normal retirement age 

(NRA) are generally subject to at least partial benefit withholding if their earnings exceed one of 

two specified thresholds.1

 Beneficiaries who attain their NRA during calendar year 2019 will 

have $1 in benefits withheld for every $2 of annual earnings in excess of $17,640. Beneficiaries 

who attain their NRA during calendar year 2019 will have $1 in benefits withheld for every $3 of 

earnings paid in 2019 prior to the month of attaining NRA, to the extent these earnings exceed

$46,920.

2

 Upon attainment of NRA, an individual’s benefit level is increased, by excluding 

 1 Dependents on a worker’s record can also have their benefits reduced or withheld if the worker has excess earnings 

above the applicable threshold. 

2 For subsequent years, these earnings threshold amounts increase each year based on changes in SSA’s average 

wage index.
Page 2 – The Honorable Jackie Walorski

from the early-retirement reduction calculation any prior months for which the benefit was fully 

or partially withheld due to the RET. 

Proposal Specifications

Under the proposal, the RET would be eliminated, starting in 2020, for all benefits paid below 

NRA. This includes benefits payable to individuals below NRA that are subject to a reduction 

for early retirement (i.e., retired worker, aged spouse, and aged widow(er) benefits) as well those 

that are not subject to a reduction for early-age receipt (such as benefits for child beneficiaries 

and spouses and surviving spouses who have a child in care). Note that benefits payable for 

disabled worker, disabled widow(er), and disabled adult child beneficiaries are already exempt 

from the retirement earnings test under current law. 

Effects on Workers and Beneficiaries

Financial effects for the OASDI program would result from changes in benefit receipt and work 

by individuals no longer subject to benefit withholding under the current RET. The changes may 

be best understood by considering the following effects of the proposal: (1) beneficiaries whose

benefits are reduced or withheld under the current-law RET would no longer have their benefits 

reduced, (2) many workers who currently do not apply for benefits because their benefits would 

be reduced or withheld due to the RET would now apply earlier, and (3) some workers currently 

subject to the RET would increase or decrease their earnings. 

1) Effects for Beneficiaries Whose Benefits Are Reduced by the Current-Law RET

Under current law, we estimate that about 520,000 beneficiaries below NRA will have their 

benefits reduced or completely withheld due to the RET in 2019. On average, about 33 percent 

of their potential benefit will be withheld during the year. If the RET were eliminated, benefits 

would be fully paid to these individuals, thus increasing program cost for benefits when these

beneficiaries are below NRA. 

Example: Consider an individual who applies for retired worker benefits at age 63 

in 2025, with a PIA of $2,000 and a benefit of $1,500 (25 percent early-retirement

reduction), and worked at an earnings level high enough to have benefits fully 

withheld from age 63 to attainment of NRA. Under current law, this individual, 

at NRA, would receive a benefit equaling the full PIA of $2,000 because no 

benefits would have been received for months where the RET would apply

(between 63 and NRA), thus eliminating any early-retirement reduction for those 

months. Under the proposal, this individual would receive the $1,500 benefit 

beginning at age 63 and at this reduced monthly benefit level for life.

About 450,000 of the beneficiaries whose benefits are reduced by the current RET in 2019 are 

receiving benefits that are subject to a permanent early-retirement reduction for months of 

benefit receipt below NRA. For these beneficiaries, the additional program cost for paying their 

benefits below NRA without any RET reduction would be more than offset in the long run by 

program savings due to additional early-retirement reductions in their monthly benefits after 
Page 3 – The Honorable Jackie Walorski

reaching NRA. This overall net decrease in benefits occurs because of changes over time in life 

expectancy and interest rates.

For the roughly 70,000 beneficiaries reduced by the current earnings test who are not subject to a 

reduction for early retirement in 2019, the additional benefits paid as a result of RET elimination 

would be a cost to the program, with no offsetting savings in later years.

2) Effects for Workers Who Would Apply for Benefits Earlier, While Still Working

In 2019, about 5 million of about 15 million individuals at ages 62 through 65 who are fully 

insured for receipt of retired worker benefits (1) have not applied for a Social Security benefit as 

early as they could and (2) have earnings at a level that would reduce their benefit if they had 

applied earlier. If the RET were eliminated, we estimate that about a third of these workers (1.7

million) would apply earlier and would on average receive benefits for 8 months in the year as a 

result of this earlier application. This additional benefit receipt below NRA would significantly 

increase benefit cost starting in 2020 but, because these workers would start benefit receipt 

earlier, their monthly benefit amount would be lower for the rest of their lives. 

Example: Consider an individual who applies for benefits at age 63 in 2025 under 

current law, with a PIA of $2,000 and a benefit of $1,500 (25 percent earlyretirement reduction). If that same individual were induced to apply at age 62 in 

2024 because of the RET elimination, the benefit would be $1,400 in 2024

(assuming the same $2,000 PIA) because of an extra year of early-retirement

reduction (increasing the overall reduction from 25 to 30 percent). Thus, under 

the proposal, ignoring cost-of-living adjustments, the individual would receive 

$1,400 each month in 2024 versus $0 under current law, but $100 per month less 

($1,400 versus $1,500) in years 2025 and later.

As described in 1) above, the permanent reduction in monthly benefit level would, on average, 

more than offset the value of additional benefit payments from earlier claiming over the long run.

We also estimate that there are about 170,000 workers in 2019 who: (1) are below NRA, (2) are 

eligible for benefits that are not subject to reduction for early retirement, (3) have not applied for 

benefits because their benefits would be reduced by the RET, and (4) would apply for benefits 

payable for about 8 months, on average, in the year if the RET were eliminated. The additional 

benefits paid to these individuals would not be offset in later years because no reduction for 

earlier benefit receipt would apply.

3) Effects for Workers Who Would Increase or Decrease Their Earnings

Elimination of the RET is estimated to have two largely offsetting effects on earnings. For 

beneficiaries who have decided not to work or whose benefits are reduced (not completely 

withheld) by the current-law RET, any additional earnings would “on the margin” be partially 

offset by the 50-percent benefit withholding of the current RET. If the RET were eliminated, 

then additional earnings would be fully realized and many of these individuals would increase 

their earnings to some degree. 
Page 4 – The Honorable Jackie Walorski

However, for individuals who have earnings at a level where benefits are or would be totally 

withheld under the current RET, elimination of the RET would allow them to receive their full 

benefit in addition to the earnings. With the availability of full benefits, these individuals could 

work less and still maintain the same or a higher standard of living (total income). We assume 

that some of these individuals would reduce work effort to a small degree based on this “income 

effect.”

We estimate that the increase in earnings under the first of these effects would be larger than the 

reduction in earnings from the second effect. We estimate that the net effect would be equivalent 

to additional annual earnings averaging 10 percent of the national average wage for 150,000 

workers. We assume that the incentive to limit earnings under the current RET is modest. As 

indicated above, for any month for which benefits are withheld or reduced due to the RET, there 

is an offsetting increase at NRA in the monthly benefit level for life, that has on average a higher 

value than the benefit reductions from the RET before NRA.

We hope these estimates are helpful. Please let me know if we may provide further assistance.

Sincerely,

 Stephen C. Goss, ASA, MAAA

Chief Actuary

Enclosure
Table 1 - OASDI Cost Rate, Income Rate, Annual Balance, and Trust Fund Ratio

H.R. 2663, "Senior Citizens' Freedom to Work Act of 2019"

Year Cost Rate

Income

Rate

Annual

Balance Cost Rate

Income

Rate

Annual

Balance

2019 13.91 12.85 -1.06 273 0.00 0.00 0.00

2020 14.22 12.88 -1.34 255 0.28 0.01 -0.27

2021 14.34 12.91 -1.43 239 0.26 0.01 -0.24

2022 14.47 12.93 -1.54 222 0.24 0.01 -0.23

2023 14.63 12.95 -1.68 205 0.23 0.01 -0.22

2024 14.81 12.98 -1.83 188 0.22 0.01 -0.21

2025 15.00 13.00 -2.00 170 0.21 0.01 -0.20

2026 15.20 13.12 -2.07 153 0.21 0.01 -0.20

2027 15.39 13.14 -2.24 136 0.19 0.01 -0.18

2028 15.60 13.19 -2.42 119 0.17 0.01 -0.16

2029 15.77 13.20 -2.57 102 0.15 0.01 -0.14

2030 15.93 13.21 -2.71 85 0.12 0.01 -0.11

2031 16.07 13.22 -2.84 67 0.10 0.01 -0.09

2032 16.19 13.23 -2.96 50 0.08 0.01 -0.08

2033 16.30 13.24 -3.06 32 0.07 0.01 -0.06

2034 16.38 13.25 -3.13 14 0.05 0.00 -0.05

2035 16.44 13.26 -3.18 ---- 0.04 0.00 -0.04

2036 16.48 13.26 -3.22 ---- 0.02 0.00 -0.02

2037 16.52 13.26 -3.26 ---- 0.00 0.00 -0.00

2038 16.55 13.27 -3.28 ---- -0.02 0.00 0.02

2039 16.57 13.27 -3.30 ---- -0.03 -0.00 0.03

2040 16.58 13.27 -3.31 ---- -0.04 -0.00 0.04

2041 16.57 13.27 -3.30 ---- -0.04 -0.00 0.04

2042 16.54 13.27 -3.27 ---- -0.05 -0.00 0.05

2043 16.51 13.27 -3.24 ---- -0.05 -0.00 0.05

2044 16.47 13.27 -3.20 ---- -0.05 -0.00 0.05

2045 16.43 13.27 -3.16 ---- -0.06 -0.00 0.05

2046 16.39 13.27 -3.12 ---- -0.06 -0.00 0.06

2047 16.36 13.27 -3.09 ---- -0.07 -0.00 0.06

2048 16.33 13.27 -3.06 ---- -0.07 -0.00 0.07

2049 16.31 13.27 -3.04 ---- -0.08 -0.00 0.07

2050 16.29 13.27 -3.02 ---- -0.08 -0.00 0.08

2051 16.28 13.27 -3.01 ---- -0.08 -0.00 0.08

2052 16.28 13.27 -3.01 ---- -0.08 -0.00 0.08

2053 16.29 13.27 -3.02 ---- -0.08 -0.00 0.08

2054 16.30 13.27 -3.03 ---- -0.08 -0.00 0.08

2055 16.33 13.27 -3.05 ---- -0.08 -0.00 0.08

2056 16.36 13.28 -3.08 ---- -0.08 -0.00 0.08

2057 16.39 13.28 -3.11 ---- -0.09 -0.00 0.09

2058 16.43 13.28 -3.15 ---- -0.10 -0.00 0.09

2059 16.48 13.29 -3.19 ---- -0.10 -0.00 0.10

2060 16.52 13.29 -3.23 ---- -0.10 -0.00 0.10

2061 16.57 13.30 -3.28 ---- -0.11 -0.00 0.10

2062 16.63 13.30 -3.33 ---- -0.11 -0.01 0.10

2063 16.68 13.30 -3.38 ---- -0.11 -0.01 0.10

2064 16.73 13.31 -3.42 ---- -0.11 -0.01 0.10

2065 16.79 13.31 -3.47 ---- -0.11 -0.01 0.10

2066 16.84 13.32 -3.53 ---- -0.11 -0.01 0.11

2067 16.90 13.32 -3.58 ---- -0.11 -0.01 0.11

2068 16.96 13.32 -3.64 ---- -0.11 -0.01 0.11

2069 17.02 13.33 -3.69 ---- -0.11 -0.01 0.11

2070 17.09 13.33 -3.75 ---- -0.11 -0.01 0.10

2071 17.14 13.34 -3.80 ---- -0.11 -0.01 0.11

2072 17.19 13.34 -3.85 ---- -0.11 -0.01 0.11

2073 17.23 13.34 -3.89 ---- -0.12 -0.01 0.11

2074 17.27 13.35 -3.92 ---- -0.12 -0.01 0.12

2075 17.30 13.35 -3.95 ---- -0.13 -0.01 0.12

2076 17.33 13.35 -3.97 ---- -0.13 -0.01 0.13

2077 17.34 13.35 -3.99 ---- -0.14 -0.01 0.13

2078 17.35 13.35 -3.99 ---- -0.14 -0.01 0.13

2079 17.34 13.35 -3.99 ---- -0.14 -0.01 0.13

2080 17.32 13.35 -3.97 ---- -0.14 -0.01 0.13

2081 17.30 13.35 -3.95 ---- -0.14 -0.01 0.13

2082 17.28 13.35 -3.93 ---- -0.14 -0.01 0.13

2083 17.26 13.35 -3.91 ---- -0.14 -0.01 0.13

2084 17.24 13.35 -3.89 ---- -0.14 -0.01 0.13

2085 17.22 13.35 -3.87 ---- -0.14 -0.01 0.13

2086 17.21 13.35 -3.86 ---- -0.13 -0.01 0.13

2087 17.20 13.35 -3.85 ---- -0.13 -0.01 0.12

2088 17.20 13.35 -3.86 ---- -0.12 -0.01 0.12

2089 17.22 13.35 -3.87 ---- -0.12 -0.01 0.11

2090 17.24 13.35 -3.89 ---- -0.12 -0.01 0.11

2091 17.27 13.35 -3.92 ---- -0.12 -0.01 0.11

2092 17.31 13.35 -3.96 ---- -0.12 -0.01 0.11

2093 17.36 13.36 -4.00 ---- -0.12 -0.01 0.11

2094 17.40 13.36 -4.04 ---- -0.12 -0.01 0.11

Summarized Rates: OASDI Summarized Rates: OASDI

Cost Rate Income Rate

Actuarial 

Balance

Change in 

Cost rate

Change in 

Income Rate

Change in 

Actuarial

Balance

2019 - 2093 16.57% 13.81% -2.76% 2034 -0.03% 0.00% 0.03%

Office of the Chief Actuary

Based on Intermediate Assumptions of the 2019 Trustees Report. Social Security Administration 1

Under current law the year of combined Trust Fund reserve depletion is 2035.

Year of reserve 

depletion1

May 14, 2019

Proposal Change from Current Law

Expressed as a percentage of current-law

taxable payroll Trust Fund

Ratio

1-1-year

Expressed as a percentage of current-law

taxable payroll
Table 1b - OASDI Changes & Implications for Federal Budget and Debt of Specified Plan Provision Effects on OASDI1

 (Present Value Dollars)

H.R. 2663, "Senior Citizens' Freedom to Work Act of 2019"

Year

Specified 

General Fund 

Transfers

Basic Changes

in OASDI

Cash Flow

Change

in Annual

Unified Budget

Cash Flow

Change in

Debt Held

by Public at

End of Year

Change

in Annual

Unified Budget

Balance

Change

in Total

Federal Debt

End Of Year

Change

in Annual

On Budget

Balance

(1) (2) (3) (4) (5) (6) (7)

2019 0.0 0.0 0.0 0.0 0.0 0.0 0.0

2020 0.0 -20.4 -20.4 20.4 -20.4 0.0 0.0

2021 0.0 -19.1 -19.1 39.4 -19.6 0.0 0.0

2022 0.0 -18.5 -18.5 57.9 -19.6 0.0 0.0

2023 0.0 -18.0 -18.0 75.9 -19.5 0.0 0.0

2024 0.0 -17.5 -17.5 93.4 -19.6 0.0 0.0

2025 0.0 -17.1 -17.1 110.4 -19.8 0.0 0.0

2026 0.0 -16.8 -16.8 127.3 -20.2 0.0 0.0

2027 0.0 -15.8 -15.8 143.1 -20.0 0.0 0.0

2028 0.0 -14.0 -14.0 157.1 -18.9 0.0 0.0

2029 0.0 -12.0 -12.0 169.1 -17.9 0.0 0.0

2030 0.0 -10.0 -10.0 179.1 -16.8 0.0 0.0

2031 0.0 -8.1 -8.1 187.3 -15.9 0.0 0.0

2032 0.0 -6.6 -6.6 193.9 -15.3 0.0 0.0

2033 0.0 -5.4 -5.4 199.3 -15.0 0.0 0.0

2034 0.0 -4.3 -4.3 203.6 -14.1 0.0 0.0

2035 0.0 -3.0 -3.0 206.6 -13.0 0.0 0.0

2036 0.0 -1.6 -1.6 208.3 -11.8 0.0 0.0

2037 0.0 -0.1 -0.1 208.3 -10.3 0.0 0.0

2038 0.0 1.3 1.3 207.0 -8.9 0.0 0.0

2039 0.0 2.3 2.3 204.7 -7.9 0.0 0.0

2040 0.0 2.9 2.9 201.8 -7.1 0.0 0.0

2041 0.0 3.3 3.3 198.4 -6.6 0.0 0.0

2042 0.0 3.6 3.6 194.8 -6.1 0.0 0.0

2043 0.0 3.8 3.8 191.0 -5.8 0.0 0.0

2044 0.0 4.0 4.0 187.0 -5.4 0.0 0.0

2045 0.0 4.3 4.3 182.7 -4.9 0.0 0.0

2046 0.0 4.6 4.6 178.1 -4.4 0.0 0.0

2047 0.0 5.0 5.0 173.1 -3.8 0.0 0.0

2048 0.0 5.3 5.3 167.8 -3.2 0.0 0.0

2049 0.0 5.6 5.6 162.2 -2.6 0.0 0.0

2050 0.0 5.8 5.8 156.4 -2.2 0.0 0.0

2051 0.0 5.9 5.9 150.5 -1.8 0.0 0.0

2052 0.0 5.8 5.8 144.7 -1.6 0.0 0.0

2053 0.0 5.7 5.7 139.0 -1.4 0.0 0.0

2054 0.0 5.6 5.6 133.4 -1.2 0.0 0.0

2055 0.0 5.6 5.6 127.7 -0.9 0.0 0.0

2056 0.0 5.8 5.8 121.9 -0.5 0.0 0.0

2057 0.0 6.1 6.1 115.8 0.1 0.0 0.0

2058 0.0 6.4 6.4 109.4 0.8 0.0 0.0

2059 0.0 6.7 6.7 102.7 1.4 0.0 0.0

2060 0.0 6.9 6.9 95.8 1.9 0.0 0.0

2061 0.0 7.0 7.0 88.8 2.3 0.0 0.0

2062 0.0 7.0 7.0 81.8 2.6 0.0 0.0

2063 0.0 7.0 7.0 74.8 3.0 0.0 0.0

2064 0.0 6.9 6.9 67.9 3.3 0.0 0.0

2065 0.0 6.9 6.9 60.9 3.6 0.0 0.0

2066 0.0 6.9 6.9 54.0 3.9 0.0 0.0

2067 0.0 6.9 6.9 47.1 4.3 0.0 0.0

2068 0.0 6.9 6.9 40.3 4.5 0.0 0.0

2069 0.0 6.7 6.7 33.5 4.8 0.0 0.0

2070 0.0 6.6 6.6 26.9 5.0 0.0 0.0

2071 0.0 6.6 6.6 20.3 5.3 0.0 0.0

2072 0.0 6.6 6.6 13.7 5.6 0.0 0.0

2073 0.0 6.8 6.8 6.9 6.1 0.0 0.0

2074 0.0 7.1 7.1 -0.2 6.7 0.0 0.0

2075 0.0 7.4 7.4 -7.5 7.4 0.0 0.0

2076 0.0 7.5 7.5 -15.1 7.9 0.0 0.0

2077 0.0 7.6 7.6 -22.7 8.4 0.0 0.0

2078 0.0 7.6 7.6 -30.3 8.8 0.0 0.0

2079 0.0 7.6 7.6 -38.0 9.1 0.0 0.0

2080 0.0 7.6 7.6 -45.6 9.5 0.0 0.0

2081 0.0 7.7 7.7 -53.3 9.9 0.0 0.0

2082 0.0 7.7 7.7 -61.0 10.3 0.0 0.0

2083 0.0 7.6 7.6 -68.5 10.6 0.0 0.0

2084 0.0 7.4 7.4 -76.0 10.8 0.0 0.0

2085 0.0 7.2 7.2 -83.2 10.9 0.0 0.0

2086 0.0 6.9 6.9 -90.1 11.0 0.0 0.0

2087 0.0 6.6 6.6 -96.7 11.0 0.0 0.0

2088 0.0 6.3 6.3 -103.0 11.1 0.0 0.0

2089 0.0 6.1 6.1 -109.1 11.2 0.0 0.0

2090 0.0 5.9 5.9 -115.1 11.3 0.0 0.0

2091 0.0 5.9 5.9 -121.0 11.5 0.0 0.0

2092 0.0 5.9 5.9 -126.8 11.8 0.0 0.0

2093 0.0 5.9 5.9 -132.7 12.1 0.0 0.0

Total 2019-2093 0.0 132.7 132.7

Based on Intermediate Assumptions of the 2019 Trustees Report.

Ultimate Real Trust Fund Yield of 2.5%.

Note: Changes reflect the budget scoring convention that presumes benefits not payable after reserve depletion would Office of the Chief Actuary

 nonetheless be paid, based on transfers from the General Fund of the Treasury resulting in additional borrowing from the public. Social Security Administration 1

 Effects of tax provisions on the On-Budget are not reflected in this table.

Billions of Present Value Dollars as of 1-1-2019

May 14, 2019
Table 1b.n - OASDI Changes & Implications for Federal Budget and Debt of Specified Plan Provision Effects on OASDI1

 (Nominal Dollars)

H.R. 2663, "Senior Citizens' Freedom to Work Act of 2019"

Year

Specified 

General Fund 

Transfers

Basic Changes

in OASDI

Cash Flow

Change

in Annual

Unified Budget

Cash Flow

Change in

Debt Held

by Public at

End of Year

Change

in Annual

Unified Budget

Balance

Change

in Total

Federal Debt

End of Year

Change

in Annual

On Budget

Balance

(1) (2) (3) (4) (5) (6) (7)

2019 0.0 0.0 0.0 0.0 0.0 0.0 0.0

2020 0.0 -21.2 -21.2 21.5 -21.5 0.0 0.0

2021 0.0 -20.4 -20.4 42.8 -21.3 0.0 0.0

2022 0.0 -20.4 -20.4 64.7 -21.9 0.0 0.0

2023 0.0 -20.4 -20.4 87.1 -22.4 0.0 0.0

2024 0.0 -20.4 -20.4 110.2 -23.1 0.0 0.0

2025 0.0 -20.5 -20.5 134.2 -24.0 0.0 0.0

2026 0.0 -20.8 -20.8 159.6 -25.3 0.0 0.0

2027 0.0 -20.2 -20.2 185.4 -25.8 0.0 0.0

2028 0.0 -18.4 -18.4 210.6 -25.2 0.0 0.0

2029 0.0 -16.4 -16.4 235.4 -24.8 0.0 0.0

Based on Intermediate Assumptions of the 2019 Trustees Report.

Note: Changes reflect the budget scoring convention that presumes benefits not payable after reserve depletion would Office of the Chief Actuary

 nonetheless be paid, based on transfers from the General Fund of the Treasury resulting in additional borrowing from the public. Social Security Administration 1

 Effects of tax provisions on the On-Budget are not reflected in this table.

Billions of Nominal Dollars

May 14, 2019