What is referred to as the “earnings test” in Social Security?

The "earnings test" in Social Security specifically refers to the review that determines if benefits need to be reduced based on post-retirement earnings. When individuals who are receiving Social Security benefits choose to work, their earnings can affect the amount of benefits they receive. If they earn above a certain threshold, their benefits may be temporarily reduced. This test is particularly relevant for individuals who claim benefits before reaching full retirement age.

Understanding this mechanism is crucial for beneficiaries, as it helps them make informed decisions regarding their work and financial planning. The parameters of the earnings test are set to incentivize continued participation in the workforce while ensuring that the benefits system remains sustainable. Therefore, option C accurately captures the essence of the earnings test in the context of Social Security.