Social Security: 8 Ways to Solve Your Money Problems
Some experts share changes that would help save Social Security from a potential deficit and avoid benefit cuts
Tick tock The clock is ticking and, as time passes, the uncertainty about the future of Social Security grows stronger. The most recent estimates on the lack of funds point to a deficit by 2032. Therefore, some specialists have proposed some actions that Congress could take to avoid cuts in benefits. We explain the 8 most relevant ones.
Various analyzes warn that, without a reform, beneficiaries could suffer a reduction of close to 28% in their monthly payments. Despite the complicated scenario, economists and specialists agree that there are multiple options to strengthen the system and extend its financial solvency.
“You and I could do it in an hour,” Alicia Munnell, senior advisor at the Center for Retirement Research at Boston College, told USA Today. "It's not difficult. It's just a matter of will, something that is conspicuous by its absence."
If the experts' proposals agree on something, there are two main objectives: raise more money for the program or reduce spending on future benefits.
1. Increase the taxable salary limit
Currently, only incomes of up to $184,500 pay taxes for Social Security during 2026. One of the proposals seeks to raise that limit so that people with higher salaries contribute more resources to the system. Specialists consider that this measure would help recover an important part of the accumulated financial deficit.
2. Completely eliminate the income cap
Another more aggressive alternative proposes eliminating the salary limit completely. In this way, all income would be subject to Social Security tax. Proponents of this idea believe that it would raise billions of additional dollars over the coming decades.
“For me, the simplest thing is to eliminate the maximum limit,” Monique Morrissey, senior economist at the Economic Policy Institute (EPI), commented to the same information portal.
3. Increase the payroll tax
Social Security is financed by a 12.4% tax on wages, divided between workers and employers. Some experts propose gradually increasing that rate to strengthen the trust fund.
“It goes from 6.2% to 7.2% for both the employee and the employer,” explained Morrissey. “And it is done over 20 years.”
However, critics warn that a tax increase could affect both companies and workers.
4. Collect taxes on medical benefits
Another lesser-known proposal is to tax Social Security on certain employer-provided health benefits, such as health insurance.
“If taxes have to be raised, I think this is the least harmful measure,” said Romina Boccia, director of budget and entitlement policy at the Cato Institute.
5. Delay the retirement age
Among the options to reduce expenses is raising the full retirement age again. Currently, workers receive the full benefit at age 67. Experts believe that a gradual increase could help reduce the financial pressure on the system.
6. Link retirement with life expectancy
Another idea, linked to the previous point, would seek to automatically adjust the retirement age as the life expectancy of the US population increases.
“Benefits are already indexed to various government measures,” Boccia said. "The same is done with the retirement age. This changes as life expectancy changes."
However, some specialists warn that this measure could harm low-income people. Research shows a relationship between income and longevity: Older Americans living in poverty tend to die several years earlier than those with higher incomes.
“Raising the retirement age is going to seriously hurt low-income people,” Munnell said.
7. Reduce benefits for those who earn the most
Another proposal contemplates gradually reducing the growth of benefits for workers with higher incomes. The measure would maintain greater support for low-income retirees and limit higher payments. Proponents of this idea maintain that the system should focus on those who depend most on Social Security to survive.
8. Set maximum limits on payments
Finally, some groups propose setting annual caps on Social Security benefits. A recent proposal suggests limits of $100,000 for couples and $50,000 for single retirees.
“The idea that someone would need a $100,000 Social Security benefit is crazy,” said Andrew Biggs, senior fellow at the American Enterprise Institute (AEI).
However, opponents consider that this measure could affect middle-class retirees who live in cities with high costs.
“In Santa Cruz, $50,000 a year is a low income,” Morrissey said. “It's not enough to make ends meet.”
The calculations surrounding the reduction of trust funds do not mean that Social Security will disappear, however, workers waiting to retire will be hurt the most. The insolvency of the program is in the hands of Congress, we will see if legislators take into account any of the ideas detailed here or if they will continue without taking action.