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.
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.
This idea may sound reasonable enough. Only the wealthiest Americans can collect $100,000 a year from Social Security. Social Security is a federal program designed to alleviate poverty, not inflate wealth.
But the idea of a “six-digit limit” quickly drew criticism from retirement advocates, who view capping or cutting Social Security benefits as a slippery slope.
The March 24 paper comes from the Committee for a Responsible Federal Budget, a centrist, nonpartisan think tank in the nation’s capital. It proposes capping total annual benefits at $100,000 for married couples who have reached full retirement age and a $50,000 limit for single retirees starting this year.
“This is for people who already have assets in the millions and tens of millions,” said Mark Goldwein, senior policy director at CRFB.
The Social Security program for retirees is projected to run out of funds by 2032. Once the funds are depleted, recipients could see their monthly benefits reduced by 28%.
Is a six-figure Social Security income too much?
Retirement advocates argue that the shortfall and benefit caps are based on Social Security’s fundamental promise that Americans who put money into the trust fund can expect their money back.
“Proposals focused on Social Security caps do not address the issue before Congress to ensure that all Americans receive all the money they earn,” Jen Jones, AARP vice president of financial security and livable communities, said in a statement.
But the six-digit limit has some prominent supporters, including the Washington Post’s editorial board.
“A six-digit limit is the right idea for a program that currently pays about one-third of its benefits to retirees with incomes over $100,000,” the paper’s board said. “The richest people of the richest generation in human history do not need any more government assistance…”
A $100,000 cap could save the Social Security program $100 billion to $190 billion over the next decade, depending on how it is implemented, according to a Washington think tank.
Who collects $100,000 in Social Security?
Today, only a small percentage of retired couples receive more than $100,000 a year in Social Security benefits.
Monthly benefits increase with age, with a maximum age of 70. The maximum monthly benefit for someone retiring at age 70 in 2026 is $5,181, according to the agency’s website. This translates to $62,172 per year.
The white paper estimates that a high-income couple retiring at age 67 in 2026 will collect $101,000.
The proposed limits vary by age, with a couple retiring at age 62 facing a $70,000 limit. A spouse retiring at age 70 can collect up to $124,000. Over time, the cap may increase with inflation.
The paper arrives at a time when many Americans are worried about the future of Social Security. Surveys show that most U.S. workers are worried that they will no longer receive the benefits they were promised when they retire.
Retirement experts widely predict that Congress will find a way to fix the system by levying more taxes, tweaking the “full” retirement age for benefits, or borrowing money.
Goldwein said the appeal of the $100,000 cap is that it only affects high earners. The Social Security program began in 1935 as a safety net “for a destitute old age,” as President Franklin Roosevelt told Congress at the time of his signing.
Experts say Congress needs to find a way to eliminate the Social Security deficit
In any case, Goldwein said benefit caps are only part of the solution to Social Security shortfalls.
In the Social Security debate, some praised the think tank for starting a discussion on how to strengthen the trust fund.
Mark Hamrick, a senior economic analyst at Bankrate, responded to the proposal, saying the proposed cap is “a worthwhile discussion as part of a broader conversation that needs to take place not only at the highest levels but also at dinner tables across the country.”
“We need to consider all ideas,” said Katherine Collinson, CEO of Transamerica Retirement Research Center. “If the funding problem was easy to solve, it would have been solved by now.”
Other economic experts expressed skepticism about whether benefit caps are the right approach.
“Simply put, it’s a bad idea. It distracts from making a real difference, which is to tax all income at the same rate,” said Monique Morrissey, senior economist at the Progressive Economic Policy Institute.
Her organization supports a different approach to solving the shortage. It would eliminate the existing cap on payroll taxes, which fund Social Security.
Workers participate in social security, which is split 50-50 between the employer and the employee. In 2026, earnings over $184,500 will not be subject to Social Security taxes. EPI estimates that lifting that cap could cover nearly three-quarters of the Social Security shortfall.
“We can and should look at revenue,” Goldwein said of increasing Social Security tax collections. “But we’re not going to solve everything on the revenue side.”
(This story has been updated to include video.)
