Here's How Americans Want to Fix Social Security's Financing Gap

As the Social Security program faces a long-term financing gap, Americans have some ideas on how to close it. A survey conducted by the National Academy of Social Insurance, AARP, the National Institute on Retirement Security, and the U.S. Chamber of Commerce in collaboration with Greenwald Research asked more than 2,200 Americans how they would solve the problem. The results showed that most respondents, 85%, said they would prefer benefits remain the same or even increase, even if that means raising taxes for some or all Americans. Only 15% of respondents said they would prefer tax rates not increase, even if that means benefits are reduced. Here are some of the changes Americans would make to close Social Security's financing gap:



1. Eliminate the payroll tax cap for high earners: The most popular policy option with respondents was eliminating the payroll tax cap for individuals earning more than $400,000. This change would reapply payroll taxes starting at $400,000 in earnings, affecting only the top 1% of earners. This change would not provide additional benefits to those affected but would help close the financing gap.
2. Raise the payroll tax rate: Another popular change was raising the payroll tax rate from 6.2% to 7.2%. This change would increase the payroll tax liability for both employers and employees, helping to close the financing gap. This change would affect all workers, regardless of income level.
3. Other changes to close the financing gap: Other changes favored by respondents include adjusting the annual cost-of-living adjustment to more accurately reflect the spending habits and inflation affecting older Americans, providing a caregiver credit for people who stop working to take care of children under age 6, and providing a bridge benefit to workers in physically demanding jobs to help soften cuts for claiming early. The least popular change was reducing benefits for people with higher incomes, which would affect individuals with $60,000 or more in annual retirement income excluding Social Security, and married couples with $120,000 or more.



These changes, taken together, would close Social Security's funding gap and result in a minor 1% surplus, according to NIRS' Bond. Notably, other changes that have been suggested elsewhere, such as raising the retirement age, across-the-board benefit increases, and changing taxation of benefits, were not selected by the survey respondents.

The new report coincides with another report released by NIRS this week that analyzed Social Security polling over more than four decades and found public support for the program remains strong. "Not only do people consider Social Security a really important program, but they really want to make sure we're spending enough on the program so that it can be there when people are ready to collect their benefits," Bond said. Notably, confidence that Social Security benefits will still be available tends to increase as people get closer to retirement age, he said.

In conclusion, Americans have some ideas on how to close Social Security's financing gap, with the most popular changes including eliminating the payroll tax cap for high earners and raising the payroll tax rate. These changes, taken together, would help close the financing gap and ensure the program's long-term solvency.