Social Security is heading toward a major financial deadline: its trust fund is now projected to be depleted in about six years, a shift that would automatically reduce retirement and disability benefits. Even so, policy experts say the program’s shortfall is not beyond repair — provided Congress is prepared to make politically difficult decisions.
According to the latest trustees’ report, several forces are putting pressure on Social Security’s finances, including an aging population, lower levels of immigration and changes to the tax base. Analysts say those challenges are serious but manageable. The gap, they note, can be addressed through higher taxes, reduced benefits or a mix of both.
That leaves the central question not whether Social Security can continue, but who will shoulder the burden of keeping it fully funded.
“It’s a simple math problem — it’s not a simple political problem,” Karen Glenn, chief actuary at the Social Security Administration, said during a recent conference call on the program’s outlook. “We need to either raise scheduled revenue, reduce scheduled benefits or some combination of the two.”
One of the most persistent misunderstandings about insolvency is the belief that Social Security would stop paying benefits altogether. That is not the case. More than 70 million Americans who depend on the program would still receive monthly payments even if the trust fund runs dry.
What would change is the size of those checks. The average monthly benefit, now $2,071, would be reduced by about $500, according to a report released earlier this month by the Committee for a Responsible Federal Budget, a fiscal policy advocacy group.
“The program is incredibly beloved, so contemplating the idea of reducing those benefits is really difficult,” said Kathleen Romig, senior fellow at the Center on Budget and Policy Priorities and a Social Security expert, on the same call. “We really need to think hard about how to raise enough money so we can afford those benefits because that is what people want.”
Here are five ideas for saving Social Security before it becomes insolvent.
Eliminate the Social Security tax cap
Social Security has applied a tax cap since the program debuted in the 1930s. The cap shields any income over a given amount from the payroll taxes that fund the program. In 2026, the threshold stands at $184,500, meaning that any earnings over that amount are exempt from a 6.2% payroll tax for workers and 6.2% tax for employers.
There are multiple proposals for eliminating or reducing the cap, ranging from phasing it out over time to introducing a “donut hole,” meaning that people earning $184,500 to $250,000 (or even $400,000) wouldn’t be subject to the payroll tax on those earnings. The tax would then kick in again for earnings above $250,000 or $400,000.
Impact: The Social Security Administration’s scoring of these proposals found they could close between 22% to 67% of the program’s funding gap, depending on the approach.
Hike the payroll tax
The Social Security payroll tax finances most of the program, but as the U.S. population ages and benefit payments rise, that revenue is no longer enough to cover all of its obligations. As a result, Social Security has been tapping its trust fund to cover the funding gap.
One option would be to raise the payroll tax to make up the difference. The Social Security Administration estimated in this year’s report that a 4.6% tax increase would be needed to keep pace with the program’s requirements. Split between workers and employers, the tax would rise to about 8.5% for each, or a combined 17% — currently, the tax is set at 6.2% for workers and 6.2% tax for employers, or 12.4% overall.
To be sure, raising the payroll tax might be politically unpalatable for lawmakers, who would almost certainly face pushback from businesses and employees, experts note.
“You are getting close to a 20% payroll tax to fund these programs,” said Jason Fichtner, senior fellow at the Bipartisan Policy Center, a Washington, D.C., think tank, and a former Social Security Administration official. “That is a huge burden on payrolls — that might really be harmful to labor hiring and labor productivity.”
Another proposal from the Committee for a Responsible Federal Budget suggests a hybrid approach that would replace the employer’s side of the payroll tax with a flat employer compensation tax on all employer compensation costs. The tax would maintain the same 6.2% rate for employers, but would eliminate the cap and tax all benefits, including wages, stock options and employer-sponsored health insurance.
Impact: Hiking the payroll tax by 4.6% would entirely erase Social Security’s gap, while the employer compensation tax would raise $2.5 trillion over a decade and close two-thirds of the shortfall, the CRFB estimated.
Raise the retirement age
Republican lawmakers have previously proposed raising the U.S. retirement age, reasoning that Americans should delay retirement to account for longer life expectancy. Still, research shows that most people stop working at about age 62, well before they had planned, due to issues beyond their control, such as health concerns or job loss.
Lawmakers pulled that lever in 1983 when the program was also on the verge of insolvency. That raised the full retirement age from 65 to 67 over two decades, with people born in 1960 or later having 67 as their threshold for claiming their full Social Security benefits.
Still, raising the retirement age would amount to a benefit cut because people would receive Social Security payments for fewer years. A 2024 Congressional Budget Office analysis found that increasing the full retirement age from 67 to 69 would reduce annual benefits by an average of 13%.
Although a cut of that size is clearly preferable to a 22% reduction if Social Security becomes insolvent, such a change is unlikely to be acceptable to millions of workers and retirees.
Impact: Depending on how quickly and by how much the retirement age is raised, such a step could address between 16% and 64% of the funding gap, the Social Security Administration estimates.
Cut benefits for higher-income workers
Some policy experts and Republican lawmakers are suggesting tweaks that would reduce benefits for higher-income workers, reasoning that these Americans are more likely to be financially prepared for retirement through their own savings and 401(k) plans than lower-income workers.
For instance, the 2025 Republican Study Committee, the largest conservative caucus in the House of Representatives, proposed changing the formula that calculates a worker’s benefits by reducing the amount for younger, high-income workers. That means people nearing retirement wouldn’t be affected — nor would lower-income workers, although the proposal didn’t include details on the age or income thresholds for the changes.
A similar idea from the American Action Forum, a center-right think tank, would tweak the formula for people earning about $90,000 annually, resulting in a cut to their benefits. For instance, someone who earns an average monthly wage of about $5,000 — a middle-income worker — would see no cut, but a high-income worker with an average monthly wage of $10,000 would see their monthly Social Security check cut by about $260.
Earlier this year, the CFRB suggested another approach: capping Social Security benefits at $100,000 for couples.
Impact:
- Changing the formula for high earners would close 9% of Social Security’s 75-year solvency gap, the American Action Forum said.
- Capping benefits at $100,000 per couple could save as much as $190 billion over a decade and close at least 20% of the program’s solvency gap, the CFRB found.
Tax investment income
Social Security relies on payroll taxes to fund its benefits, but some experts point out that investment income, such as capital gains and dividends, is shielded from tax. That primarily benefits the nation’s wealthiest, highest-earning workers, who also currently don’t pay Social Security taxes on any income above $184,500.
Following the trustees’ report and Elon Musk becoming the world’s first trillionaire through the SpaceX IPO, Sen. Bernie Sanders, an independent from Vermont, touted his plan to shore up Social Security through new taxes on high-income Americans. Aside from raising the tax cap, Sanders is proposing adding a 12.4% tax on all investment and business income.
Blockbuster tech IPOs, such as SpaceX’s June 12 initial stock sale, could prove a boon for Social Security if they were taxed, said Teresa Ghilarducci, a labor economist and a professor at The New School for Social Research in New York, on the June 11 call.
“We would solve the problem now,” she added.
Impact: Sen. Sanders’ proposal would close Social Security’s funding gap entirely, according to an analysis from the Social Security Administration.
