A proposal would cap Social Security at $100,000. Will it fly?

A Washington think tank proposed capping annual Social Security benefits at $100,000 for couples as a way to shrink a looming deficit in the retirement trust fund.

The idea might sound reasonable enough: Only the wealthiest Americans can collect $100,000 a year from Social Security, a federal program that was meant to ease poverty, not pad wealth.

But the “Six Figure Limit” idea has drawn swift rebukes from retirement advocates, who see any cap or cut in Social Security benefits as a slippery slope.

The March 24 paper comes from the Committee for a Responsible Federal Budget, a centrist, nonpartisan think tank in the nation’s capital. It suggests a $100,000 cap on the total annual benefit for a couple at full retirement age, and a $50,000 limit for a single retiree, starting this year.

“This is for people who already have millions and tens of millions in assets,” said Marc Goldwein, senior policy director at CRFB.

The Social Security program for retirees is projected to run short of funds by 2032. Once the fund is depleted, recipients could see a 28% cut in monthly benefits.

Is a six-figure Social Security income too much?

Retiree advocates say any shortfall or benefit cap goes back on a fundamental promise of Social Security: That Americans who pay into the trust fund can count on getting the money back.

“Proposals that focus on capping Social Security don’t address the problem in front of Congress: ensuring every American gets every dollar they have earned,” Jenn Jones, vice president of financial security and livable communities at AARP, said in a statement.

But the six-figure limit also has prominent supporters, including the editorial board of the Washington Post.

“The Six Figure Limit is the right idea for a program that currently pays about one-third of benefits to retirees with incomes over $100,000,” the board at the newspaper wrote. “The wealthiest members of the wealthiest generation in human history do not need more government largesse. . .”

According to the Washington think tank, a $100,000 cap could save the Social Security program $100 billion to $190 billion over the next decade, depending on how it was implemented.

Who collects $100,000 in Social Security?

Currently, only a small share of retired couples collect Social Security payments over $100,000 a year.

Monthly benefits rise with age, maxing out at 70. According to the agency website, the top monthly benefit is $5,181 for someone who retires in 2026 at 70. That works out to $62,172 a year.

The white paper calculates that a top-earning couple retiring at age 67 in 2026 would collect $101,000.

The proposed cap would vary with age: A couple retiring at 62 would face a $70,000 limit. Spouses who retire at 70 could collect up to $124,000. The cap might rise with inflation over time.

The paper arrives at a moment when many Americans fear for the future of Social Security. Surveys suggest most American workers worry the promised benefits won’t be there when they retire.

Retirement experts widely predict Congress will find a way to make the program solvent, by collecting more taxes, tweaking the “full” retirement age for benefits, or borrowing funds, among other options.

The appeal of a $100,000 cap, Goldwein said, is that it affects only top earners. The Social Security program began in 1935 as a safety net “against poverty-ridden old age,” as President Franklin Roosevelt told Congresswhen signing it into law.

Congress needs to find ways to close the Social Security deficit, experts say

In any case, Goldwein said, a benefit cap would only be part of a solution to the Social Security shortfall.

Several voices in the Social Security debate applauded the think tank for starting a conversation about how to shore up the trust fund.

The proposed cap “is a worthy thread as part of a broader discussion that needs to take place at the highest levels, as well as at kitchen tables across America,” said Mark Hamrick, senior economic analyst at Bankrate, responding to the proposal.

“All ideas should be explored,” said Catherine Collinson, CEO of the Transamerica Center for Retirement Studies. “If the funding issues could be easily solved, they would have been addressed by now.”

Other economic experts voiced skepticism that a benefit cap is the right approach.

“The short answer is that it’s a bad idea – a distraction from what would really make a difference: taxing all earnings at the same rate,” said Monique Morrissey, senior economist at the progressive Economic Policy Institute.

Her organization favors a different approach to closing the shortfall: Eliminating an existing cap on the payroll taxes that fund Social Security.

Workers pay into Social Security with a levy split between employers and employees. In 2026, earnings above $184,500 are not taxed for Social Security. Eliminating that cap could fund nearly three-fourths of the Social Security shortfall, EPI estimates.

“We can look at revenues, and we should,” Goldwein said, of collecting more Social Security taxes. “But we’re not going to solve it all on the revenue side.”

(This story was updated to add a video.)

This article originally appeared on USA TODAY: Should Social Security be capped at $100,000? A new paper says so