A New Social Security Proposal Could Fast-Track Seniors Paying Off Mortgages in Retirement

Living on a fixed income is more difficult these days, especially for homeowners. With more retirees choosing to stay in their family homes, many are facing the financial burdens of maintaining larger, older properties, including higher property taxes and increased maintenance costs.

For those reaching retirement age, these costs often necessitate working even after becoming eligible for Social Security. Consequently, many seniors feel forced to delay retirement to avoid losing a portion of their benefits due to the “earnings test” while they are still employed.

However, a new Republican-backed proposal would allow millions of older Americans to earn more money from work without seeing their Social Security benefits reduced.

And this would be a huge win for older homeowners eager to age in place.

The Senior Citizens’ Freedom To Work Act

Currently, Social Security benefits are reduced for individuals who claim them before reaching their full retirement age (FRA) if their earnings exceed a specific limit.

In 2026, the retirement earnings test for individuals under the FRA (currently age 67 for most) allows them to earn up to $24,480 annually. If income exceeds this limit, Social Security reduces benefits by $1 for every $2 earned over the cap. While these withheld benefits are eventually credited back once the individual reaches full retirement age, the immediate loss of income can be a hurdle.

The proposed Senior Citizens’ Freedom To Work Act would change that.

The bill, recently introduced by Sen. Rick Scott of Florida and Rep. Greg Murphy of North Carolina, both Republicans, would repeal the retirement earnings test provision, allowing seniors to keep the entirety of their benefits upfront regardless of their work income.

“American seniors’ ability to earn income and enjoy the dignity of work should not be penalized by arbitrary parameters to receive Social Security benefits,” Murphy said in a statement.

“Current law unnecessarily complicates seniors’ right to access the benefits they paid into for the entirety of their careers. … The Retirement Earnings Test is a bureaucratic hurdle that does more harm than good.”

With those extra funds in hand, seniors could more easily pay off costs like existing mortgages, insurance premiums, and other housing cost burdens that have seen dramatic increases in recent years.

Seniors dominating the workforce right now

This proposal comes as Americans are retiring later than ever—with housing costs playing a major role in that shift.

In nearly every state, the share of seniors aged 65 and older remaining in the workforce has grown since 2014, according to an analysis of the U.S. Census Bureau’s American Community Survey data by Realtor.com®.

The data shows that the number of working seniors has exploded over the past decade, increasing by a staggering 52%. This growth significantly outpaces the general population growth of 33%.

With a 21% senior workforce participation rate, the Northeast leads the country. Furthermore, this region is home to half of the top 10 states with the highest percentage of currently employed seniors.

These increases coinciding with the most expensive housing markets suggests that rising costs—such as insurance, property taxes, and maintenance—are putting immense pressure on older homeowners to remain in the job market longer.

To that end, with more seniors working, there’s clearly an increased need to examine Social Security benefits.

“This bill will get rid of the unfair Retirement Earnings Test so that seniors who want to stay in the workforce can do so without being punished or robbed of their hard-earned benefits,” Scott said during a March 25 Senate aging committee hearing.