MW Social Security is hurtling towards insolvency. Could these new proposals help save it in time?

By Jessica Hall

Ideas for reform churn up opposition from advocacy groups

Social Security provides benefits to about 75 million older adults, people with disabilities and surviving family members.

With Social Security's insolvency looming in about seven years, new proposals are emerging to reform a program that provides benefits for about 75 million Americans - yet the biggest advocacy groups for seniors are balking at many of the suggested changes.

One of the recent suggestions is from the Center for a Responsible Federal Budget (CRFB), a nonpartisan policy analysis and research group. It has proposed that the cost-of-living adjustment, or COLA, for Social Security should be limited in size for those with the largest benefits and highest lifetime income.

Another group, the Progressive Policy Institute $(PPI)$, a center-left think tank, has made several recommendations - including basing Social Security benefits on the number of years worked, rather than the earnings received over a lifetime.

The proposed reforms come as Social Security recently announced its annual COLA, which will add 2.8% to beneficiaries' benefits starting in January 2026. The COLA, which amounts to an average additional $56 to a beneficiary's monthly check, will be mostly offset by an expected increase in Medicare premiums that are automatically deducted from Social Security payments. Also, the COLA is backward-looking and reflects the inflation in 2025, not the inflationary pressures going forward that older adults still must grapple with.

Social Security needs solutions

There's no shortage of ideas to repair the troubled program - and Americans have indicated they would be willing to sacrifice to save it - but so far, no legislative changes have been made. U.S. Rep. John Larson, a Democrat from Connecticut, has been trying to fix Social Security's shortfalls since at least 2015, when he first introduced the Social Security 2100 Act.

Read: The man who fixed Social Security when it went broke in the '80s has some advice for today's politicians

But the clock is ticking. If Congress doesn't act to shore up the program, the trust fund backing Social Security faces insolvency in 2033, at which point the fund would pay out only 77% of scheduled benefits.

Social Security's chief actuary, Karen Glenn, issued a warning in August that the insolvency date could be accelerated because of the Republican tax bill known as the One Big Beautiful Bill Act, which was signed into law this summer and included a temporary enhanced tax deduction for older Americans.

"Seven years is a lifetime for Congress, but it's not when you're trying to plan your retirement," said Marc Goldwein, senior vice president and senior policy director at the Center for a Responsible Federal Budget. The group plans to offer about a dozen different Social Security ideas over the next year to 18 months to spark discussion and encourage change, he said.

The last time Social Security was overhauled was in the 1980s, but Congress waited until the last minute to address the problems.

"If we wait until 2032 to address this, we'll have to make abrupt changes or do some borrowing," Goldwein said. "There are big costs to waiting."

Goldwein said the typical couple would see an $18,400 annual cut to Social Security benefits if nothing is done to address the insolvency issue.

Two proposals, in detail

Under the CRFB plan, all beneficiaries would continue to receive a COLA, but there would be a cap that would limit the increase for retirees with the largest benefits and the highest lifetime incomes.

"Everyone still gets a COLA. It just doesn't go up with income," Goldwein said. "The top quarter tends to have the most wealth outside of Social Security."

While there will likely need to be a mix of Social Security changes to address insolvency, Goldwein said the COLA cap idea "is a good arrow to have in your quiver."

Under the PPI proposal, Social Security would pay benefits based on the number of years a person worked, rather than their earnings over their lifetime. That structure links Social Security's status as an "earned benefit," said Ben Ritz, vice president of policy development and director of the Center for Funding America's Future at the Progressive Policy Institute.

"This keeps Social Security as an earned benefit. Other proposals out there strain that link even further," Ritz said.

Under the PPI proposal, anyone who works for at least 20 years would receive a benefit that keeps them out of poverty, in a way that would allow a low-income worker and their higher-wage boss to get the same benefit if they put in the same amount of work. Parents would also receive up to five years of credit for caregiving.

The PPI plan has many components, but some of the other aspects include increasing Social Security's retirement ages to reflect rising life expectancies while still keeping a special early retirement age for lower-earning workers who have not experienced the same gains in longevity.

Another PPI measure would change the formula behind the COLA to the chained consumer-price index for all urban consumers (C-CPI-U), rather than the current consumer-price index for urban workers (CPI-W).

Under the PPI proposals, taken together, the people facing the biggest hit financially would be the top one-fifth of the lifetime earners. Those cuts would be on par to the cuts already slated to occur under current law, the group said. The majority of beneficiaries would see no reduction in their monthly benefit, and many low-income or long-career workers would even receive greater benefits, according to the PPI proposal.

PPI said the suggested reforms, taken together, would close half of Social Security's shortfall over the next 30 years while also reducing old-age poverty.

The percentage of older adults in poverty rose to 15% in 2024, up from from 14.2% the previous year and representing the highest poverty rate among all age groups, according to the U.S. Census Bureau.

Advocacy groups on alert

AARP over the weekend sent out an email alert to its members about the various proposals, which were presented last week at a CRFB event on novel Social Security and Medicare reforms in Washington.

"The last thing we need is D.C. insiders making decisions on our hard-earned money. AARP advocates always stand up to protect Social Security and Medicare, and together we'll fight any idea that puts our money in jeopardy," AARP said in the email alert. "This week's COLA announcement already has some people wondering if they can cover rising costs. The LAST thing Americans 65-plus need is more questions and uncertainty about the Social Security they earned throughout their working lives."

Asked about that email, CRFB's Goldwein said: "AARP fundraises off of scaring people. They're still at the fundraising stage, rather than the solutions stage."

The Senior Citizens League, an advocacy group for older adults, said it appreciated aspects of the proposals but still feels the best way to close the gap on Social Security insolvency is for wealthier Americans to pay Social Security taxes on all their earnings.

"The Progressive Policy Institute's proposal is certainly innovative. We appreciate the fact that they propose a long-term phase of at least 10 years. The Senior Citizens League has long advocated for the longest possible transition period for any changes to Social Security. As with the Committee for a Responsible Federal Budget's proposal, this proposal also does not fix the problem of inadequate COLA," said Shannon Benton, executive director of the Senior Citizens League.

The Senior Citizens League has recommended that the COLA be based on the CPI-E, or consumer-price index for the elderly, which more closely resembles the goods being bought each month by retired Americans.

Overall, the Senior Citizens League supports raising or removing the cap on the maximum amount of earnings subject to the Social Security tax, known as the taxable maximum. That threshold will increase to $184,500 in 2026, up from $176,100 currently, according to the Social Security Administration.

"The quickest and most straightforward way to address insolvency is to raise or remove the payroll cap. According to Social Security actuaries, raising the payroll cap to 90% rather than the current 82% would close about one-third of the long-term funding shortfall. Or, eliminating the cap entirely - taxing all earnings - would close around 70% to 75% of the long-term shortfall, depending on details of benefit adjustments," Benton said.

Meanwhile, another advocacy group, Social Security Works, spoke out against both the CRFB and PPI proposals.

"Both of these proposals would make enormous cuts to Social Security's modest benefits. They do so by radically changing the system. Currently, Social Security is a defined-benefit pension plan designed to replace wages. The amount you receive is linked to what you earned and what you contributed while working," said Nancy Altman, president of Social Security Works.

"CRFB's proposal would weaken the link between earnings and benefits, while PPI's would demolish the link. Both of them are designed to move Social Security towards a poverty-level flat benefit," Altman said. "Instead of trying to scam people out of their hard-earned benefits, we should require millionaires and billionaires to pay their fair share into the system."

-Jessica Hall

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October 31, 2025 08:00 ET (12:00 GMT)

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