Proposal to Hold Social Security at $100,000. Will It Fly?
A Washington think tank has proposed capping annual Social Security benefits at $100,000 for couples as a way to reduce future shortfalls in the retirement fund.
The concept may sound reasonable enough: Only the wealthiest Americans can collect $100,000 a year from Social Security, a government program designed to alleviate poverty, not pad wealth.
But the idea of a “Six Figure Limit” has drawn immediate criticism from retirement advocates, who see any increase or reduction in Social Security benefits as a slippery slope.
The March 24 paper is from the Committee on a Fiscally Responsible Budget, a nonpartisan think tank in the nation’s capital. It proposes a $100,000 cap on total annual earnings for a couple at full retirement age, and a $50,000 limit for a single retiree, starting this year.
“This is for people who already have millions and tens of millions in assets,” said Marc Goldwein, senior director of policy at CRFB.
The Social Security system for retirees is expected to run out of money by 2032. Once the fund is depleted, recipients can see a 28% reduction in monthly benefits.
Is a Six-Figure Social Security Income Too Much?
Retirement advocates say any shortfall or profit goes back to Social Security’s basic promise: That Americans who pay into the trust fund can count on a refund.
“Proposals focused on holding back Social Security don’t address the problem before Congress: making sure every American gets every dollar they’ve earned,” said Jenn Jones, vice president of financial security and healthy communities at AARP, in a statement.
But the six-figure limit has prominent supporters, including the Washington Post’s editorial board.
“The Six Figure Limit is a good idea for a plan that currently pays about one-third of benefits to retirees with earnings above $100,000,” the board wrote in the newsletter. “The richest members of the richest generation in human history don’t need more government money. . . .
According to a Washington think tank, the $100,000 cap could save the Social Security system $100 billion to $190 billion over the next ten years, depending on how it is implemented.
Who Collects $100,000 in Social Security?
Currently, only a small percentage of retired couples collect more than $100,000 a year in Social Security payments.
Monthly benefits increase with age, up to age 70. According to the agency’s website, the maximum monthly benefit is $5,181 for someone retiring in 2026 at age 70. That works out to $62,172 a year.
The white paper calculates that the highest-earning couple retiring at age 67 in 2026 will collect $101,000.
The proposed cap would vary by age: A couple retiring at age 62 would face a cap of $70,000. Married couples who retire at age 70 can collect up to $124,000. The cap may increase with inflation over time.
The paper comes at a time when many Americans fear the future of Social Security. Research suggests that most American workers worry that the promised benefits won’t be there in retirement.
Retirement experts widely predict that Congress will find a way to dilute the system, by collecting more taxes, adjusting the “full” retirement age for benefits, or borrowing funds, among other options.
The appeal of the $100,000 cap, Goldwein said, only affects the highest earners. The Social Security system began in 1935 as a safety net “against poverty-stricken old age,” as President Franklin Roosevelt told Congress when he signed it into law.
Congress Needs to Find Ways to Close Social Security Shortfall, Experts Say
In any case, Goldwein said, the benefit cap will be part of the solution to the Social Security deficit.
The proposed cap is “an appropriate thread as part of a broader conversation that needs to happen at the highest levels, and at kitchen tables across America,” said Mark Hamrick, chief economist at Bankrate, in response to the proposal.
Some economists have expressed doubts about the profit margin.
“The short answer is that it’s a bad idea — a distraction from what would really make a difference: taxing all wages at the same rate,” said Monique Morrissey, senior economist at the Progressive Economic Policy Institute.
His organization favors a different approach to closing the deficit: Eliminating the existing income tax bill that pays for Social Security.
Employees pay into Social Security with a tax split between employers and employees. In 2026, income above $184,500 is exempt from Social Security tax. Eliminating that portion could finance nearly three-quarters of the Social Security deficit, EPI estimates.
“We can look at the revenue, and we should,” Goldwein said, about collecting more Social Security taxes. “But we’re not going to solve everything on the revenue side.”
This article first appeared in USA TODAY: Proposal would cap Social Security at $100,000. Will it fly?
Reporting by Daniel de Visé, USA TODAY / USA TODAY
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