Every few months, another headline tells Americans that Social Security is going broke.
It’s scary. It’s also not quite true.
Social Security isn’t going to wake up one morning with zero dollars coming through the door. Even if its trust fund reserves are depleted, millions of workers will still be paying Social Security taxes every payday.
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The problem is that those taxes eventually won’t generate enough money to pay 100% of scheduled benefits.
So, let’s stop pretending Social Security can’t be fixed. It can. You’re just probably not going to like the fix. Here are three changes Washington should seriously consider.
In 2026, employees pay 6.2% into Social Security, and employers contribute another 6.2%, but the tax stops once wages reach $184,500.
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Someone making $100,000 pays Social Security tax on every dollar. Someone making $1 million doesn’t. That’s going to become increasingly difficult politically and mathematically to defend.
My first suggestion: Raise the Social Security taxable wage ceiling to $400,000. For somebody earning $400,000, that would expose another $215,500 of wages to Social Security taxes. It also doesn’t make Social Security an infinite tax like Medicare.
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At today’s 12.4% combined employee-employer rate, that’s potentially another $26,722 annually flowing into the system from that worker and employer combined.
Depending on exactly how Congress structured the change, we’re potentially talking about well over $1 trillion of additional revenue over a decade. Higher earners won’t like it. I wouldn’t like paying it either. But Social Security needs revenue. It’s called a compromise.
Here’s the second part politicians really won’t want to advertise. Especially Democrats.
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Everyone needs some skin in the game. Instead of suddenly slamming workers with a giant payroll-tax increase, raise the employee Social Security tax rate from 6.2% to 7.2% gradually over 10 years.
That’s just 0.1 percentage point each year. Employers would see a corresponding gradual increase.
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For someone earning $75,000, the first increase amounts to about $75 for the entire year. Ten years later, the employee would be paying an additional $750 annually at today’s income.
Nobody enjoys paying more taxes. But slowly adjusting the rate over a decade gives workers and businesses time to adapt.
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Now comes the third rail. Retirement age. Today’s full retirement age is 67 for people born in 1960 or later. Don’t change the deal for someone who’s 62 and has spent their entire working life planning around 67. Instead, draw a line.
If you were born after 1990, gradually move full retirement age to 70. Someone born in 1991 turns 35 this year. They have decades to plan for the change.
People are living longer than generations before them. If we’re going to make Social Security financially sustainable for another generation, the retirement-age math eventually has to reflect longevity.
Here’s the political problem. Republicans don’t want tax increases. Democrats don’t want benefit reductions. Workers don’t want to pay more. Employers don’t want to pay more.
High earners certainly don’t want another $200,000-plus of wages subjected to payroll taxes. And nobody wants to hear they’re working until 70.
Welcome to compromise.
There are really only three levers available to fix Social Security, and it’s really this simple unless you start doing means testing. Tax more income. Raise more revenue. Reduce future benefits. This plan pulls all three.
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Higher earners pay Social Security tax on more wages. Workers and employers gradually contribute more. Younger Americans wait longer for full retirement benefits. And importantly, Social Security doesn’t “run out of money.” Payroll taxes continue coming in even if the trust fund reserves are exhausted.
That’s why Congress should stop scaring Americans and start solving the problem. Because the longer Washington waits, the uglier the eventual solution becomes. Nobody gets everything they want under this plan.
That’s exactly why it might actually work.