Ten Ways to Fix Social Security and Who Pays for Each
By Alvin Blackshear | Historian & Researcher
The first article in this series established that Social Security has a
financing problem. What it left open is the question beneath every proposal,
which is who should bear the cost across generations and income groups. No
single fix exists. Each option adjusts some mix of revenue, benefits,
eligibility and timing. So this article puts ten concrete options through the
same test, using estimates from the Social Security Administration's Office of
the Chief Actuary built on the 2026 Trustees projection, where the 75-year
shortfall equals 4.42 percent of taxable payroll. The test is simple. How much
of that shortfall does each option remove, and who feels it?
|
Option |
Share of shortfall removed |
Who bears it |
|
Raise taxable maximum to
cover 90% of earnings |
about 24% |
Higher earners |
|
Tax earnings above $400,000 |
roughly 50% |
Highest earners |
|
Raise payroll rate one
point by 2037 |
20% |
Workers and employers |
|
New dedicated revenue, such
as investment income |
varies, up to about 41% |
Investors or taxpayers |
|
Full retirement age to 68 |
11% to 13% |
Younger cohorts |
|
Full retirement age to 69 |
16% to 32% |
Younger cohorts |
|
Cut annual COLA half a
point |
24% |
All beneficiaries |
|
Progressive price indexing
above the median |
27% |
Future higher earners |
|
Stronger minimum benefit |
adds 1% to 5% to shortfall |
Trust fund |
|
Change benefit taxation |
from a 13% cost to a 19%
gain |
Retirees, by income |
One caution before reading further. Each estimate stands alone against current law, and the actuaries warn that provisions overlap, so the figures cannot simply be added together.
The revenue side
Payroll tax
reaches only the first $184,500 of earnings, which makes that ceiling the most
discussed lever. Raising it until 90 percent of earnings are taxed recovers
about a quarter of the shortfall. Taxing earnings above $400,000 recovers
roughly half, depending on design, and the Committee for a Responsible Federal
Budget puts full elimination of the ceiling near half as well. Those choices
concentrate the cost on a small group of high earners. A rate increase spreads
it across everyone who works. One extra point by 2037, shared by workers and
employers, covers a fifth. Eliminating the entire shortfall through rate alone
would take an immediate jump from 12.4 percent to 17.0 percent.
New revenue
sources raise a subtler question. Investment income taxes or general revenue
could help, yet they would loosen Social Security's identity as a benefit
earned through one's own contributions. Whether that matters is a judgment
rather than a calculation.
The benefit side
Benefit
changes distribute cost across time. Raising the full retirement age can sound
administrative, but the Congressional Budget Office found that moving it
from 67 to 69 would leave everyone affected with less in lifetime benefits.
The actuaries score a move to 68 at 11 to 13 percent of the shortfall and a
move to 69 at 16 to 32 percent, depending on pace and design. Trimming the
annual cost-of-living adjustment by half a point removes 24 percent, because
small yearly reductions compound for as long as a retiree lives. Progressive
price indexing, which slows the growth of initial benefits only above the
median earner, removes 27 percent while sparing those at or below the median.
The retirement-age and indexing changes reach mainly people not yet retired.
The cost-of-living cut reaches everyone already collecting.
Options that run the other way
Two entries
complicate the story. A stronger minimum benefit for long-career, low-wage
workers widens the shortfall by 1 to 5 percent, a reminder that reform need not
mean only subtraction. Changes to how benefits are taxed range from a 13
percent cost to a 19 percent gain, depending on direction.
The price of waiting
Delay quietly
rewrites the table. The CRFB estimates that acting today would require a 4.25
point payroll tax increase or a 25 percent cut in all benefits. By 2034 the
required change grows by about 15 percent. Every year of hesitation hands
someone else a larger bill.
What comes next
No option here
is free, and only an implausibly large rate increase solves the problem alone.
The real work lies in combination. My third article assembles these pieces into
complete packages, checks whether they truly restore solvency, and asks what
each would mean for a 70-year-old, a 50-year-old and a 25-year-old.
Sources
SSA Office of the Chief Actuary,
Summary of Provisions (2026 Trustees basis)
https://www.ssa.gov/OACT/solvency/provisions/summary.html
CRFB, Analysis of the 2026 Trustees Report (June 9)
https://www.crfb.org/papers/analysis-2026-social-security-trustees-report
Congressional Budget Office, Raising
the Full Retirement Age for Social Security
https://www.cbo.gov/publication/60516








