Think tank proposes capping Social Security benefits at $100,000
A Washington think tank has proposed capping annual Social Security benefits for married couples at $100,000 as a way to reduce a looming deficit in retirement trust funds.
Social Security is said to be underfunded, on the brink of bankruptcy, and on the brink of bankruptcy. Although the term is figurative and imprecise, many Americans take it literally.
Almost two-thirds of us believe that benefit payments will stop when the feared Social Security shortage arrives around 2032.
The findings come from a paper by researchers at UCLA and Cornell University published in the April issue of the Journal of Experimental Psychology: General.
But is Social Security really running out of money? The facts are:
Is Social Security really running out of money?
Social Security faces a looming fiscal cliff. More money is flowing out than coming in from federal programs, and once-rich cash reserves are dwindling.
AARP estimates that if reserves are depleted and no action is taken, federal agencies will have enough money to pay only about 81% of all benefits.
There’s a big difference between 81% and zero, but many Americans don’t realize it. A new study examines a fundamental misconception about the fate of America’s retirement trust funds.
One of the paper’s authors, Suzanne Shu, is a professor of marketing at Cornell University’s SC Johnson College of Business.
Whenever Schuh talks to ordinary Americans about Social Security, she said, people “say things like, ‘Social Security is going bankrupt, it doesn’t exist anymore.'”
She and her colleagues wondered, “Is there something going on with messaging here?”
Here’s why Americans think Social Security is broken
Their research found that many Americans believe that Social Security is “broken” because of how the deficit is framed in public discourse.
“It doesn’t help that there are politicians and others who say Social Security is going to fail,” Shu said.
An overview of the social security system is as follows.
A portion of the proceeds will go to two Social Security trust funds. One for retirement benefits and one for disability. Social Security benefits are paid from these funds.
Social Security is known as a “pay-as-you-go” program. Currently, most benefits paid to retirees are collected from active workers. The profits you receive are not the money you earn. (This is also a common misconception.)
Throughout most of its history, Social Security collected more money than it paid out, generating a total of $2.7 trillion in reserves as of the end of 2024. But as America ages, reserves are shrinking. Latest projections indicate depletion by 2032.
Unraveling the social security shortage
When Americans read about Social Security shortfalls, the discussion usually centers on its dwindling reserves.
In a new study, when study participants looked at a graph showing their reserves dropping to zero, 64% believed their benefits would then disappear completely.
That idea ignores a basic fact about Social Security: New income comes in every year. Therefore, even if reserves are depleted, the program will continue to pay the majority of current benefits.
When study participants looked at a graph showing the money going in and out of the Social Security program, the proportion who thought they would receive no benefits at all dropped to 56%, still a majority.
Researchers have found that an even better way to explain the Social Security shortfall is to remind Americans of the payroll tax that funds the system.
“Think like a worker,” Shu says. “Do you think the government is going to stop taking Social Security from people’s paychecks?” If so, “Next question is, where do you think that money will go?”
When study participants thought about the continued use of taxes to fund Social Security, the proportion who expected no benefits dropped to about 40%.
Anxiety about social security drives bad decisions
This study reaffirms that many Americans are concerned about losing their Social Security benefits when they retire.
A Bankrate survey conducted in the fall of 2025 found that 77% of Americans are concerned that they will not receive the benefits they were promised at retirement.
In a 2025 report from the Transamerica Retirement Research Center, 71% of Americans who have not yet retired expressed concern that Social Security “won’t exist for them.”
That fear has led many Americans to claim Social Security early, on the theory that they should collect their checks for the rest of their lives.
In the 2025 AARP survey, nearly a quarter of Americans ages 62 to 66 said they had decided to claim Social Security early within the past year or planned to do so.
For many retirees, claiming Social Security early is a mistake. You can claim as early as age 62, but your monthly checks get bigger the longer you wait, up to age 70. Based on average human lifespans, economists say most people are better off waiting.
Later, when Schuh spoke about the benefits of claiming Social Security for working Americans, she said, “A lot of the feedback I get is, ‘I don’t think Social Security is going to last that long, so why should I wait?'”
