Almost 50: Can Social Security be fixed? Part 2

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.