Social Security could face insolvency by 2032. A new proposal from the Committee for a Responsible Federal Budget (CRFB) suggests capping Social Security benefits at $100,000 for the wealthiest 0.005% of earners, those with an average net worth of over $65 million, may prolong the funding pool.
Currently, Social Security is funded by a trust fund and payroll taxes, but it’s projected to face a 24% benefit reduction when the trust fund is depleted. The Six Figure Limit (SFL) proposal introduces a $100,000 annual benefit cap for couples retiring at the normal age, with adjustments based on marital status and age. For individuals, the cap is $50,000.
Over time, more retirees would be affected by the SFL, with the top 1% of couples receiving 5% less in benefits on average by 2030 with no impact on the bottom 90%. That would shift to a 7% benefit reduction in 2040 for the top 1% and no impact on the bottom 80%; and to a 24% benefit reduction for the top 1% in 2060 with no impact on the bottom 70% of households.