Dear Quentin,
I know that Social Security is projected to run short of the funds needed to pay full benefits in a few years. A few ideas have been suggested to help reduce the shortfall. One idea I read about on MarketWatch is to cap Social Security payments at $50,000 per year.
Another is to limit the cost-of-living adjustment for those receiving more than a certain amount in benefits. Neither idea seems to make sense to me.I have worked for 54 years and I have increased my benefits through years of working six-day weeks, nights, graveyard shifts, Sundays and holidays in my early years.
The maximum Social Security check at full retirement age (67) is already $4,152 per month (or $49,824 a year) for 2026. The only way to go above this is to claim at age 70 for a maximum of $5,181 per month (or $62,172 a year).
This means that the only people collecting more than $50,000 per year are those who waited until after their FRA to file for Social Security. If I reach age 67 and see that I am approaching the $50,000 limit, wouldn’t I simply claim Social Security at age 67 and collect $49,824 per year for those three years?
Social Security would pay out almost $150,000 over five years after retirement, and I would still remain under the $50,000 annual cap. Then, say I die 10 years later. Social Security would have paid out $28,000 more than if I had waited. Can you make sense of this?
Why would someone like me wait until 70 to get the so-called maximum benefit?
Irked and Curious
You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com. The Moneyist regrets he cannot reply to questions individually.
Dear Irked,
All those graveyard shifts and overtime have, I hope, paid off.
There have been discussions about cutting benefits to help ensure that the Social Security Administration doesn’t run out of money, as demographic pressures are expected to increase over the next decade.
There are advantages to both taking Social Security early and waiting until age 70. Delaying Social Security beyond full retirement age (FRA) until 70 increases monthly benefits by roughly 8% annually, resulting in monthly payments up to 30% higher than at FRA. The trade-off for waiting is that the breakeven point for this strategy is generally in your early 80s.
The Congressional Budget Office released a report last February estimating that the Old-Age and Survivors Insurance Trust Fund will be exhausted in 2032.
“Under current law, the Social Security Administration cannot pay benefits in excess of the available balances in a trust fund, borrow money for a trust fund, or transfer money from one trust fund to another,” it said. (Congress has in the past adjusted payroll-tax allocations between trust funds when needed.)
Against this backdrop, the idea you’re referring to was outlined in a recent paper published by the Committee for a Responsible Federal Budget. The so-called six-figure limit would place a $100,000 cap on the total benefit that a couple retiring at the normal retirement age — effectively the same thing as FRA — can receive.
Your decision to take Social Security at full retirement age or to wait depends on your expected longevity.
This cap would be adjusted based on marital status and claiming age. For those born in 1960 or later, this would mean a $50,000 limit for a single retiree claiming at 67, for a total projected savings of $100 billion to $190 billion over a decade, according to the paper.
The aim is to obtain 60% to 90% of the savings from the top fifth of retirees in 2060, including 40% to 60% from the top 10th, and to boost benefits for the bottom 70% to 80% of beneficiaries, with benefit increases of 4% to 25% for the bottom quarter of beneficiaries in 2060.
“The very highest income couples can now collect $100,000 a year in Social Security benefits,” the researchers said. “Such high benefits are currently only available to a small fraction of retirees — those who both earned at least the Social Security taxable maximum.”
Whether to claim at full retirement age or delay benefits depends largely on your expected longevity. You would, as you say, not break even until your late 70s or early 80s, and a cap on benefits could reduce your reasons for waiting to claim.
Achieving meaningful change
Your Social Security benefit is based on the 35 years when your earnings were highest. Depending on your other income in retirement, your Social Security benefits may be taxable. If you delay claiming until age 70, that might also push you into a higher tax bracket.
I’m not convinced that limiting Social Security benefits to $50,000 a year would meaningfully extend the program’s life, because so few people receive that amount in benefits in the first place. The average retiree gets roughly half that amount.
The main pressures on Social Security stem from demographic shifts: people are living longer and birth rates have fallen, reducing the ratio of workers to retirees.
Suggestions for reform to the Social Security system focus more on revenue and eligibility than caps on benefits, despite the attention such caps receive. Those suggestions include raising or eliminating the payroll-tax cap.
Social Security is undergoing demographic shifts as people are living longer and birth rates are falling.
Raising or eliminating the cap on wages subject to Social Security taxes seems like a viable option. Earnings above a certain level aren’t taxed for Social Security — in 2026, that amount is $184,500 — so raising that cap would bring in more revenue from workers with higher incomes.
Other proposed adjustments to Social Security include raising the retirement age, which would be sure to create a great deal of pushback from the public. A modest, gradual increase in the payroll-tax rate is another option for shoring up the long-term solvency of the program.
Spreading out a smaller adjustment over many years would help distribute the financial burden among current and future generations, avoiding immediate, punitive tax hikes. Slowing the growth of benefits for the highest earners is another political hot potato.
You are, therefore, correct. A silver-bullet solution like capping benefits at $50,000 for single filers and $100,000 for married couples does not exist and, like all of the other suggestions, raises questions about implementation and practicality.
You sound ready to claim at 67. There’s nothing wrong with that.
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