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Social Security fixes could significantly impact benefits in the future. It’s evident that changes are crucial as funds continue to dwindle. If no action is taken by 2034, beneficiaries might not receive their full entitlements. This situation creates concern among many Americans.
Recent data from a LendingTree survey highlights this anxiety, showing 62% of people fear not being able to retire without Social Security, and 59% doubt the program’s survival.
Moreover, President Trump’s proposal to modify Social Security taxes has stirred debate. While the promise was to abolish these taxes, a temporary tax relief has been offered to eligible seniors, expected to expire in 2028. Despite the concerns, experts suggest there’s no need for panic right now.
Addressing this issue is vital for ensuring retirees receive full benefits. Here are four potential strategies for reforming Social Security.
Increasing FICA Contributions
The Federal Insurance Contributions Act (FICA) is integral to Social Security funding, currently set at 12.4% between employees and employers. According to Nicole E. Asher, boosting this rate could boost program funds. Originally, FICA began at 2% in 1937, gradually increasing to the current rate by 1990.
Adjusting the Wage Cap
As of 2025, earnings up to $176,100 are subject to Social Security taxes. Raising or rescinding this limit could mean higher earners contribute more, which would benefit the trust fund, according to Michael Liner of Liner Legal. This adjustment, however, poses complexities as benefit calculations are linked to contributions, notes Chris Barnes from Escalent.
Diversifying Investment Options
The Social Security Trust Fund primarily invests in low-yield U.S. Treasury securities. The CBPP suggests that allocating a portion to higher-yield investments like index funds might enhance returns. This change can fortify the program over time without immediate impacts on current beneficiaries.
Revising Retirement Age
Increasing the retirement age for future workers from 67 to possibly 69 is another key consideration. Earlier retirements would slightly reduce benefits, whereas delayed ones could result in higher monthly payouts. Liner emphasizes the need for exceptions for those in strenuous careers or facing health challenges, crucial concerns his firm, Liner Legal, frequently encounters.
Implications for Current Beneficiaries
Immediate changes for current Social Security recipients are not anticipated, though future adjustments could bring about reductions. “Those still working,” Asher points out, “might face reduced benefits upon filing, or even increased taxes.” Exploring options with a financial advisor is wise for predicting retirement income scenarios.
Regardless of these potential reforms, individuals should evaluate their financial planning to accommodate possible benefit reductions and safeguard their futures.
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