Beneficiaries affected by the annual earnings test, 1989

The earnings test of the Social Security Act has, since its introduction in 1939, been one of the more controversial provisions of the Act. The controversy has centered on the role that the test plays on the retirement decision and the issue of whether or not Social Security benefits become an "earned right" after an individual reaches retirement age and therefore should be paid regardless of subsequent earnings. This article presents a history of the earnings test and how it has evolved into the test in effect today. It presents demographic data for the 1,241,000 beneficiaries who in 1989 had at least ! in benefits withheld as a result of the test. Of this total, 926,000 were retired-worker beneficiaries. The other persons affected by the test were dependents and survivors who had benefits offset due to their own earnings. Collectively, these persons had over % billion in benefits withheld. In addition to these persons, there is a potentially large group of individuals who never filed for benefits because they knew that their benefits would be withheld.