Social Security’s looming insolvency sparks alarm in Congress

By

June 17, 2026 / 11:39 AM EDT

/ CBS News

Add CBS News on Google

Social Security's trust fund is projected to  run out of money  in just six years, triggering automatic cuts in retirement and disability benefits. Yet experts say the program's financial problems are fixable — if lawmakers are willing to make difficult choices.

The latest trustees' report found that Social Security's finances are being strained by an aging population, lower immigration and tax changes. But unlike some fiscal challenges, the retirement program's funding gap can be closed through a combination of higher taxes, lower benefits or both, according to policy analysts.

In other words, the debate is less about whether Social Security can be saved than which Americans should bear the cost of saving it.

"It's a simple math problem — it's not a simple political problem," Karen Glenn, the chief actuary of the Social Security Administration, said in a recent conference call to discuss the program's finances. "We need to either raise scheduled revenue, reduce scheduled benefits or some combination of the two."

A common misconception is that Social Security's insolvency would mean it would no longer offer benefits to the more than 70 million Americans who rely on the program for income.

Instead, beneficiaries would continue to receive monthly checks, though the typical payment — currently $2,071 per month — would be cut by  roughly $500 , according to a report published earlier this month by the Committee for a Responsible Federal Budget, an advocacy group focused on fiscal issues.

"The program is incredibly beloved, so contemplating the idea of reducing those benefits is really difficult," said Kathleen Romig, senior fellow at the Center on Budget and Policy Priorities and a Social Security expert, on the same call.  "We really need to think hard about how to raise enough money so we can afford those benefits because that is what people want."

Here are five ideas for saving Social Security before it becomes insolvent.

Eliminate the Social Security tax cap

Social Security has applied a tax cap since the program debuted in the 1930s. The cap shields any income over a given amount from the payroll taxes that fund the program. In 2026, the threshold stands at $184,500, meaning that any earnings over that amount are exempt from a 6.2% payroll tax for workers and 6.2% tax for employers.

There are multiple proposals for eliminating or reducing the cap, ranging from phasing it out over time to introducing a "donut hole," meaning that people earning $184,500 to $250,000 (or even $400,000) wouldn't be subject to the payroll tax on those earnings. The tax would then kick in again for earnings above $250,000 or $400,000.

Impact: The Social Security Administration's  scoring of these proposals found they could close between 22% to 67% of the program's funding gap, depending on the approach.

Hike the payroll tax

The Social Security payroll tax finances most of the program, but as the U.S. population ages and benefit payments rise, that revenue is no longer enough to cover all of its obligations. As a result, Social Security has been tapping its trust fund to cover the funding gap.

One option would be to raise the payroll tax to make up the difference. The Social Security Administration estimated in this year's report that a 4.6% tax increase would be needed to keep pace with the program's requirements. Split between workers and employers, the tax would rise to about 8.5% for each, or a combined 17% — currently, the tax is set at 6.2% for workers and 6.2% tax for employers, or 12.4% overall.

To be sure, raising the payroll tax might be politically unpalatable for lawmakers, who would almost certainly face pushback from businesses and employees, experts note.

"You are getting close to a 20% payroll tax to fund these programs," said Jason Fichtner, senior fellow at the Bipartisan Policy Center, a Washington, D.C., think tank, and a former Social Security Administration official. "That is a huge burden on payrolls — that might really be harmful to labor hiring and labor productivity."

Another proposal from the Committee for a Responsible Federal Budget suggests a hybrid approach that would replace the employer's side of the payroll tax with a flat employer compensation tax on all employer compensation costs. The tax would maintain the same 6.2% rate for employers, but would eliminate the cap and tax all benefits, including wages, stock options and employer-sponsored health insurance.

Impact: Hiking the payroll tax by 4.6% would entirely erase Social Security's gap, while the employer compensation tax would raise $2.5 trillion over a decade and close two-thirds of the shortfall, the CRFB estimated.

Raise the retirement age

Republican lawmakers have previously proposed raising the U.S. retirement age , reasoning that Americans should delay retirement to account for longer life expectancy. Still, research shows that most people stop working at about…