The Social Security Board of Trustees announced earlier this year that everyone’s favorite government program can pay 100% of scheduled benefits until the fourth quarter of 2032. After that, the Social Security Trust Fund will be depleted, and we will only have enough money to pay a little over three-quarters of promised benefits.
(Cue the collective cynical shrug from Generation X, which has learned not to count on nice things.)
This imminent shortfall is hardly a surprise—the Social Security Administration (SSA) has been forecasting the depletion of the Trust Fund and the corresponding inability to pay out 100% of scheduled benefits for at least 16 years. Which is why the government’s refusal to propose any solutions before we run out the insolvency clock is the leading cause of ulcers in actuaries, people planning to retire in the next 10 years, and your Uncle Leo.
While there are a number of possible Social Security fixes, each one has the potential to seriously tick off various groups. That’s why we may not see real proposals for solving the shortfall until we’ve nearly hit the deadline (which is what happened back in 1983 when Social Security amendments were implemented mere weeks before the money ran out). It’s also entirely possible that Congress will enact Band-Aids that kick the issue down the road rather than solve the problem for the long term.
Understanding the most commonly proposed solutions is one of the best things you can do to help hurry along the process of fixing Social Security. Here’s what you need to know about how we might eliminate the Social Security shortfall.
How the program currently works
Social Security is more than 90 years old, which means that probably every single person reading this has never known a world without it. When a program is that deeply entrenched, it’s easy to miss important details about how it operates—and understanding the mechanics is the first step to understanding potential fixes.
To start, most Social Security funding comes from a 12.4% payroll tax on earned income, with the employee and employer each contributing 6.2%. Social Security works as a direct handover from current workers to current beneficiaries—but in years the SSA collected more in taxes than it paid out in benefits, the excess was invested in government debt (like Treasury bonds), with a guaranteed minimum interest rate of 3%. This excess is called the Social Security Trust Fund, and it’s the money that is currently running out.
Under the current system, we don’t have enough workers paying enough money into the system to ensure that beneficiaries in 2033 and beyond will receive 100% of the benefits promised to them.
What we can adjust
There are only three levers we can pull to cover the imminent shortfall:
- Increase the amount of money paid into the program.
- Increase the number of workers.
- Decrease benefits.
Unfortunately, each option comes with unpopular disadvantages that could make it a political nonstarter. But if Americans understand how adjusting these three aspects of Social Security funding would work, we’ll be in a better position to negotiate a mix of solutions that will satisfy (or at least not enrage) everyone.
Increasing money paid into the program
If you’re running out of money, getting more is typically the most obvious solution to the problem. And there are several proposals for how to do this.
Raise the payroll tax
Currently, workers and employers each pay 6.2% in payroll taxes toward Social Security, for a total tax percentage of 12.4%. (Anyone who is self-employed is on the hook for the full 12.4%.)
Raising the payroll tax to 8.4% for both workers and employers—a combined rate of 16.8%—would completely eliminate the shortfall for 75 years. But getting Americans to agree to this kind of tax hike—even if it’s implemented in small stages over time—sounds about as likely as mastering time travel.
Eliminate the taxable maximum
The SSA sets an annual taxable base rate that rises every year based on average wage growth. As of 2026, this taxable maximum is set at $184,500. (It increases to $192,300 in 2027.) You pay Social Security taxes on every dollar you earn up to that base rate, but not above it.
That means the maximum anyone pays in Social Security taxes in 2026 is $11,439 (6.2% of $184,500), while their employer pays the same amount. In other words, an engineer earning $200,000 and Elon Musk both pay the same amount into Social Security.
Eliminating the taxable maximum amount could eliminate up to 73% of the Social Security shortfall for the next 75 years, according to a 2021 report by the Congressional Research Service. (The numbers may have changed somewhat in the five years since this report was published, but it remains true that getting rid of the taxable maximum will cover a large portion of the shortfall over the next three-quarters of a century.)
While this potential solution would probably gain traction among the 94% of the population whose income is below the annual taxable base rate, the 6% with higher incomes tend to have outsize political power.
Increasing the number of workers
Whether or not we tinker with the percentage of taxes paid or the taxable maximum, more workers would also help Social Security’s cash flow. But where will these new workers come from?
Raise the birth rate
To keep a stable population, a country must maintain a total fertility rate of 2.1 children for every woman. America’s fertility rate has been declining, recording its lowest-ever rate in 2024 with 1.6 births per woman. In addition to disappointing huge swaths of would-be grandparents, a declining birth rate also means we have fewer and fewer workers to pay into Social Security as those babies grow up.
Increasing America’s fertility rate would be a long-term solution to Social Security’s financial woes, but there are several stumbling blocks. The biggest is that it would take multiple decades for any initiative we enact to show up in Social Security funding. Additionally, the kinds of programs that encourage fertility, such as paid parental leave and subsidized childcare, can be politically controversial.
Encourage immigration
Immigrants, including legal residents and those who are undocumented, are a net benefit to the Social Security program. That’s because immigrants pay into the system via payroll taxes, just like any other workers, while a significant portion are not eligible to receive benefits later in life.
Since immigrants are more likely to be of working age when they arrive in the U.S., encouraging more immigration gives the economy the same boost as a higher birth rate 25 or 30 years ago. The Center on Budget and Policy Priorities reports that if annual net immigration were roughly 400,000 more people, it would reduce Social Security’s shortfall by 11%.
But immigration has been a political flashpoint for a very long time, which makes this solution a difficult one to implement.
Decreasing benefits
While no one likes the idea of reducing benefits, it is one way to lower Social Security’s costs. Although it’s exceedingly unlikely that the SSA would ever reduce benefits for current beneficiaries, there are some proposals that may affect future benefits.
Raise the retirement age
Currently, full retirement age—the age when you are entitled to your full Social Security retirement benefits—is set between 66 and 67, depending on your birth year. You may take benefits as early as 62, but the amount you receive is permanently reduced by approximately 8% per year between age 62 and your full retirement age.
Congress has already increased the retirement age once. In 1983, recognizing that the baby boom generation would begin retiring en masse as of 2011, Congress incrementally increased full retirement from age 65 to 67. This made the boomers’ retirement less expensive for Social Security, as they either received lower payments if they claimed benefits before the new retirement age, or they waited longer.
Life expectancy in the U.S. has increased over time, meaning Social Security has been asked to provide benefits for a longer period. Some experts recommend increasing the retirement age to 68 for Gen Z and/or Gen Alpha in order to reduce future costs.
However, life expectancy isn’t the same across all income levels. Lower-income workers have a shorter life expectancy and are less likely to live to retirement—and these workers also tend to rely more heavily on Social Security benefits when they do retire. Increasing the retirement age for these workers could harm the very citizens Social Security was created to protect.
Change the price index
Current Social Security beneficiaries receive an annual cost-of-living adjustment (COLA) to ensure their benefits maintain the same buying power throughout their retirement. COLA is calculated using the consumer price index (CPI), which measures the average change in prices for a basket of consumer goods.
But the CPI doesn’t account for elasticity of demand, which is a fancy way of saying that when prices go up, people change their spending habits. Which is why many experts recommend switching to the chained CPI for COLA calculations. This index accounts for spending substitutions in response to price changes, and theoretically offers a more accurate inflation index.
While this change could help relieve some of the financial pressures on Social Security, it’s an adjustment that would be felt most keenly by current beneficiaries. Imagining Nana and Pop-Pop having to subsist on ramen and tuna fish because of this change makes it a difficult adjustment to sell to the American public.
Change and compromise
It’s likely that we’ll see a combination of tweaks to our system to avert the Social Security shortfall. Raising (or eliminating) the taxable maximum and encouraging immigration, especially among higher-income immigrants, are two of the solutions that seem most likely to quickly move the needle as we decide how to handle our increased life expectancy.
Our politicians are afraid to touch Social Security’s imminent shortfall for good reason: There’s no silver bullet that will solve the problem. Each potential solution must balance the financial, political, and social costs. Understanding how these possible solutions could work can help us start the arduous process of proposing and implementing them.
