How To Save Social Security

At some point, Congress will need to save Social Security, or not. According to the 2025 Trustees Report, the Old-Age and Survivors Insurance (OASI) trust fund will become insolvent by 2033. The combined OASI and Disability Insurance (DI) funds will suffer that same fate in 2034. The truly frightening thing is that, according to the same report, if Congress does nothing, the situation will become catastrophic. “At that time (2034), there would be sufficient income coming in to pay 81 percent of scheduled benefits.”

The first challenge of fixing the Social Security problem is that some group will be unhappy.

Several serious proposals to address the problem have been put on the table. Among the most widely regarded is the “Fixing Social Security: Blueprint for a bipartisan solution,” from Brookings, which was published late last year. Another, titled “Will Social Security Run Out?” is from the Roosevelt Institute. The Economic Policy Institute has its own. So does Cato, which thinks the blueprint has already been created in Canada, Germany, New Zealand, and Sweden.

The issue comes down to several options. Should benefits for disabled or retired people be cut? Social Security lifts 22 million Americans above the poverty line. This includes adults and children. For many others, Social Security may not be 100% of their income, but it is the lion’s share.

The effects of solutions may be easy to approximate, but hard to implement because they will be unpopular to one large group of voters or another. For members of Congress, that means risking votes from those who are upset with one of the conclusions.

The Social Security tax could be increased from 12.4% to a higher rate. Depending on other changes, this might need to go up to 15%. Another option is to raise the dollar cap on what current employees pay. According to Social Security, “In 2026, the maximum amount of earnings on which you must pay Social Security tax is $184,500.” This cap could be raised to $250,000-$400,000 to make a meaningful contribution. The more radical decision would be to eliminate the cap completely.

There could also be a measure of net worth to set payouts, but net worth is almost impossible to calculate by person or household.

People who would need to pay more will see themselves as bailing out a system that some may not use for decades. They don’t want a solution that is financially balanced on their backs.

The other most ready solution is to raise the age at which people can take benefits. Today, the payments are available from age 62 to 70, with full benefits starting at 67. It would take an actuary to calculate figures, which might be incorrect anyway because of the size of the universe of recipients. However, the range needs to shift upward to a new one of 65 to 72 years.

The challenge with retired or soon-to-retire voters is that they have paid the Social Security tax for their entire working lives and should not be denied their benefits, they believe. Older Americans are more likely to vote than younger ones. That puts many members of Congress in a corner.

There are ways to save Social Security, and there are not many years to find one.