6 Key Social Security Changes Americans Want to See!

Social Security, a vital program for millions of Americans, faces a funding crisis with a projected shortfall of nearly $23 trillion over the next 75 years. This is according to the most recent Trustees Report. If changes aren’t made soon, Social Security’s trust funds could be depleted within the next decade. The worst-case scenario could see benefits cut by nearly 25%. Though this drastic reduction is not guaranteed, the urgency for reform is clear.

Despite years of discussion, no solid solutions have been implemented yet. However, recent findings from a National Academy of Social Insurance (NASI) survey present several ideas that could resolve the funding issue and improve the Social Security system. More than 80% of respondents supported a package of six major changes. Here’s a breakdown of the proposed changes that could transform Social Security for the better.

1. Impose Payroll Taxes on Earnings Over $400,000

The most popular proposal from the NASI survey calls for introducing a “donut hole” for Social Security payroll taxes. Under the current system, Social Security taxes apply only to the first $176,100 earned in 2025. Anything above that is not taxed or factored into Social Security benefits.

The new proposal would leave the cap unchanged but introduce taxes for earnings over $400,000. Initially, income between $176,100 and $400,000 wouldn’t be taxed, but this “donut hole” would eventually phase out by around 2048. This idea is appealing to many Americans who never reach the $176,100 cap, but high earners may not welcome the additional tax without an increase in benefits.

2. Gradually Raise Payroll Tax Rates from 6.2% to 7.2%

Another proposed change is a gradual increase in the Social Security payroll tax rate. The current tax rate is 12.4%, split evenly between employees and employers. The proposal suggests raising the employee and employer tax rate from 6.2% to 7.2%.

For an average earner making $50,000, this would increase their monthly tax payment by about $42. Although no one wants to pay more taxes, this small increase is considered a manageable fix to boost Social Security’s funding.

3. Adjust COLA Calculations for Senior Citizens

The Social Security Administration (SSA) issues annual Cost-of-Living Adjustments (COLA) to ensure benefits keep up with inflation. However, the current COLA formula is based on the spending habits of urban wage earners, not seniors.

Retirees often find that COLA adjustments do not accurately reflect their expenses. The NASI survey suggests using the Consumer Price Index for the Elderly (CPI-E), which focuses on senior spending. Adopting this approach would likely lead to larger COLAs for retirees, although it would increase Social Security’s expenses.

4. Introduce a Caregiving Credit

The amount of Social Security benefits you receive is based on your earnings during your highest-earning 35 years. But if you take time off to care for children or family members, those years with no income can significantly reduce your benefits.

To address this issue, the NASI survey proposes a caregiving credit. This credit would help offset the negative impact of time taken off work to care for young children, especially for women who are more likely to be caregivers. While the specific details of this credit haven’t been finalized, it’s a step in the right direction toward more equitable Social Security benefits.

5. Provide a Bridge to Benefits for Older Workers with Physically Demanding Jobs

Older workers in physically demanding jobs often have no choice but to claim Social Security early, which reduces their monthly benefits. The NASI survey suggests reducing the penalty for early claiming for these workers, who may be unable to continue working in physically taxing roles.

By lowering the penalty for early claiming, these workers would receive a more fair benefit, helping them retire earlier without sacrificing a large portion of their Social Security payments. This proposal has widespread support from workers in challenging industries.

6. Reduce Benefits for High-Income Retirees

The final proposal in the NASI survey is to reduce Social Security benefits for retirees with higher retirement incomes. If an individual’s income, excluding Social Security, exceeds $60,000 or a married couple’s income exceeds $120,000, their benefits would be reduced.

While this change might seem fair to those with substantial savings, it’s a controversial proposal. Many middle-class retirees could be affected, and there’s resistance to reducing benefits for those who have worked hard throughout their careers.

Will These Changes Become Reality?

While the NASI survey suggests a potential solution to Social Security’s funding crisis, it’s still unclear whether these proposals will become law. Congress is likely to debate several options before making any decisions. In the meantime, both workers and retirees will need to continue planning for a future that may include changes to their Social Security benefits.

As we move closer to the depletion of the trust funds, these proposals represent a starting point for reforming Social Security and ensuring its sustainability for future generations. Whether or not these changes are adopted, the debate around Social Security is far from over.

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