Social Security Could Pay Full Benefits Until 2059 Under AARP Scenario as $10.8 Trillion In Potential Revenue Was Missed Due to Shrinking Taxable Payroll
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Social Security could have paid full scheduled benefits through 2059 if taxable payroll had remained at its 1983 share of the U.S. economy, according to an AARP report examining how changing income patterns have weakened the program’s finances.
AARP Report Finds Social Security Lost Revenue As Taxable Payroll Shrunk
The AARP Public Policy Institute released the report Tuesday, examining how changes in income patterns have weakened Social Security’s finances. The program primarily receives funding through payroll taxes, with workers and employers each contributing 6.2% of wages up to an annual taxable limit, which stands at $184,500 in 2026.
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The report found that the share of gross domestic product (GDP) represented by wages subject to Social Security payroll taxes declined from 41% in 1983 to 34% in 2025. GDP measures the total value of goods and services produced in the economy. AARP attributed the shift partly to rising business profits, investment income and wages exceeding the taxable earnings cap.
The report also found that Social Security’s costs exceeded its revenue by $160 billion, or 11%, in 2025.
Had taxable payroll remained at 41% of GDP, Social Security would have generated an estimated additional $10.8 trillion in payroll-tax revenue and interest between 1984 and 2034, in inflation-adjusted 2025 dollars. The additional revenue and interest would have extended the combined trust funds’ projected life to 2059, allowing full scheduled benefits for 25 years longer than the current projection.
The trustees project that the combined retirement and disability trust funds will be depleted in 2034. At that point, Social Security would be able to pay about 83% of scheduled benefits, the report said.
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Retirement Adviser Says Democrats And Republicans Must Agree On A Fix
During a Wednesday appearance on Fox Business’ “Varney & Co.,” Prime Capital Financial Chairman and Managing Partner Scott Colangelo discussed upcoming Social Security changes and the program’s funding outlook.
Colangelo said a 3.6% cost-of-living adjustment (COLA), an annual increase in benefits, would add about $75 per month for the average beneficiary. He also estimated that workers would pay $480 to $500 more annually in payroll taxes, attributing the increase to wage growth.
When host Stuart Varney asked whether lawmakers should raise the retirement age or Social Security taxes to address the funding gap, Colangelo did not endorse either approach. He said the issue required both parties to work together, adding, “I do think the Democrats and Republicans, this is a topic they have to come together on.”
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Lawmakers Have Already Debated Social Security Tax Changes
In September, Sen. Bernie Moreno (R-Ohio) joined Sen. Elizabeth Warren (D-Mass.) in proposing to raise the payroll tax cap, while Rep. Tom Cole (R-Okla.) said he was willing to consider increasing the tax rate or the amount of income subject to the tax.
In November, Urban-Brookings Tax Policy Center fellow Jessica Riedl said payroll tax increases were “extraordinarily unlikely” in the next couple of years, citing limited interest in tax hikes from both parties. She said any such increases would likely come closer to 2032, when the Social Security retirement trust fund is projected to be depleted.
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