Social Security is a crucial source of income for millions of retirees in the U.S. However, experts warn that the program is running out of money and may have to reduce benefits in the next decade. While some suggest raising the retirement age or cutting payments, economist Teresa Ghilarducci believes the best solution is to bring in more money by making the richest Americans contribute more.
A Simple Fix: Taxing the Wealthy More
Ghilarducci, a professor at The New School, points out that just one billionaire paying Social Security taxes on their entire income could make a huge difference. “If Elon Musk paid Social Security taxes on his full salary and a portion of his capital gains, it could reduce the Social Security deficit by 1/20,” she said in a 2024 Bloomberg interview. “Now imagine doing the same for 20,000 other wealthy individuals.”
Currently, Social Security taxes only apply to earnings up to $176,100 in 2025. That means high earners stop paying taxes on income above that threshold. One way to fix the shortfall is to eliminate this cap so that people earning over $400,000 continue contributing.
Public Support for Higher Taxes on the Rich
Surveys from organizations like AARP and the U.S. Chamber of Commerce show that most Americans support tax increases to keep Social Security benefits intact. In fact, 85% of respondents said they would rather see taxes go up than face benefit cuts.
Here are two widely supported solutions:
| Proposal | Impact |
| Remove the payroll tax cap for earnings over $400,000 | Ensures high earners contribute more while also increasing their future benefits |
| Gradually increase payroll tax from 6.2% to 7.2% | Raises more funds without heavily burdening middle-class workers |
Why Working Longer Isn’t a Realistic Solution?
Some argue that people should work longer before retiring, but Ghilarducci disagrees. “Not everyone is living longer,” she explains. Wealthy professionals might enjoy longer lifespans, but many blue-collar and service workers face health problems from physically demanding jobs.
“Even jobs that aren’t blue-collar, like retail and caregiving, require heavy lifting, bending, and standing for long hours. These jobs wear people down,” she adds. This means that forcing people to delay retirement could put their health at risk.
A New Plan to Help Workers Save for Retirement
Ghilarducci also supports a nationwide retirement savings program for workers without employer-sponsored pensions. The Retirement Savings for Americans Act would automatically enroll employees in a government-run pension plan with required contributions. Workers earning below the median income would get a 5% government match to help them save for retirement.
She argues that this plan would work better than the current 401(k) system, which was never meant to be the main retirement option for all Americans. “401(k)s were designed to supplement pensions and Social Security—not replace them,” she says. Also check Average 401(k) Plan Benefit for Retirees Age 65 and Older for better update.
FAQs
1. What is the biggest issue with Social Security right now?
Social Security is facing a funding shortfall, meaning it won’t have enough money to pay full benefits in the future unless changes are made.
2. Why do experts suggest taxing high earners more?
Right now, Social Security taxes only apply to income up to $176,100. If the tax cap were removed, wealthy individuals would contribute more, helping to close the funding gap.
3. Would raising payroll taxes affect middle-class workers?
A small increase in payroll taxes (from 6.2% to 7.2%) would help raise funds without significantly affecting middle-income earners.
4. Why isn’t raising the retirement age a good idea?
Not everyone can work longer due to health issues, especially those in physically demanding jobs. Raising the retirement age would hurt lower-income workers the most.
5. How would the proposed national retirement savings plan help workers?
It would automatically enroll workers in a government-managed pension plan and provide a 5% government match for lower earners, helping them save for retirement.