Social Security Limit Repeal Could Benefit Community Banks

According to banking experts, community banks stand to benefit from the recent repeal of penalties on earnings made by seniors receiving Social Security.

The new law, which was signed April 7, is called the Senior Citizens' Freedom to Work Act, indicating how its sponsors felt it would affect the retirement community. It removes a penalty that costs working people ages 65 to 69 $1 in Social Security benefits for every $3 they earn above a $17,000 threshold. Over 700,000 people now pay that penalty.

According to the Independent Community Bankers of America (ICBA) and other banking organizations, the penalties' repeal could bring in $20.1 billion to the people it affects over the next 10 years and can provide employers new sources of qualified workers.

Those funds are income seniors can save to augment their retirement savings, which can boost community bank core deposits and reinvestment in local communities, ICBA says.

Copyright © 2000 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 10, No. 5, 5/00