How Should Social Security Be Reformed? Seniors Consider 7 Options

Social Security is facing a projected funding shortfall in less than a decade, and older Americans are weighing in on how the program should be reformed.

According to the latest Social Security Trustees report, the program’s two trust funds—the Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) funds—are projected to reach insolvency by 2034. At that point, benefits would rely entirely on incoming payroll taxes, resulting in an automatic cut of approximately 21 percent, unless Congress intervenes.

The looming shortfall has sparked renewed debate about how to keep the program solvent, and a new survey from The Senior Citizens League (TSCL), one of the nation’s largest nonpartisan seniors groups, shows that older Americans have strong opinions on the matter.

Among 1,920 respondents over the age of 62, 50 percent support eliminating the cap on earnings subject to payroll taxes, making it the most popular reform option by a wide margin.

Currently, only the first $176,100 of a worker’s annual income is subject to the 6.2 percent Social Security payroll tax, which is matched by employers to make a total contribution of 12.4 percent. High earners pay no tax on income above that threshold. Removing this cap would mean those with higher incomes contribute more to the system.

“Eliminating the payroll tax cap is one of the most straightforward and fair ways to strengthen Social Security,” JB Beckett, founder of Beckett Financial Group, a financial planning firm in South Carolina, told Newsweek. “While it’s not a silver bullet, incremental reforms like this could prevent across-the-board benefit cuts.”

Colin Ruggiero, co-founder of DisabilityGuidance.org, agrees: “Eliminating or lifting the payroll tax cap is widely seen as one of the fairest and most direct ways to improve the program’s solvency.”

What Do Seniors Think?

While there is near-universal agreement that something must be done, seniors have differing opinions on how to solve the problem.

After eliminating the payroll tax cap, the next most popular proposals in the TSCL survey included:

• Creating a fast-track process for Congress to vote on Social Security legislation (38 percent)
• Increasing the payroll tax rate (31 percent)
• Applying the 6.2 percent tax to investment income for high earners (29 percent)

Less popular were more drastic or market-linked measures. Just 19 percent supported allowing the government to invest payroll taxes in stocks, bonds, or other assets. Even fewer—18 percent—supported raising the full retirement age to 70, while a mere 1 percent backed reducing cost-of-living adjustments (COLAs). Fifteen percent opposed all of the potential reforms TSCL presented.

Low support for raising the retirement age and investing in the markets reflects deep concern among retirees about fairness and stability, experts said.

“Raising the retirement age feels like a benefit cut, especially for people in physically demanding jobs or with shorter life expectancies,” Ruggiero told Newsweek. “It essentially asks people to work longer for less.”

Beckett agreed: “Most retirees are skeptical of raising the retirement age, and for good reason—it can feel like a cut in benefits.”

Both experts acknowledged that longer lifespans and demographic shifts complicate the situation. When Social Security was created in 1935, life expectancy was around 63 years, meaning some workers never lived long enough to collect benefits. Today, many live decades into retirement, while fewer workers contribute to the system per beneficiary.

What Comes Next?

With the clock ticking toward insolvency, advocates say the window for less painful reforms is closing.

“The sooner we act, the more options we’ll have, and the less painful the adjustments will be,” said Beckett.

This isn’t the first time Social Security has faced a financial crunch. In the early 1980s, the trust funds also came close to insolvency. In response, Congress enacted a series of reforms, including accelerating payroll tax hikes, gradually increasing the retirement age, and taxing a portion of Social Security benefits.

Now, with similar concerns on the horizon, lawmakers are once again proposing solutions. Senator Sheldon Whitehouse of Rhode Island and Representative Brendan Boyle of Pennsylvania, both Democrats, have reintroduced the Medicare & Social Security Fair Share Act, which would apply payroll taxes to wages and investment income above $400,000.

Meanwhile, Republican Senator Bill Cassidy and Democratic Senator Tim Kaine have proposed creating a new $1.5 trillion investment fund for Social Security.

The Treasury would finance the fund, which would be invested in a diversified mix of stocks, bonds, and other assets aimed at generating higher returns over a 75-year period. The Treasury would be repaid at the end of the term, with the gains used to support Social Security benefits.