Summary
A new proposal suggests capping annual Social Security Cost-of-Living Adjustments (COLAs) for high-income earners to help stabilize the program's funds. This change aims to protect most beneficiaries from inflation while adjusting increases for those who receive the largest benefits. The proposal could potentially save billions of dollars and address part of the Social Security funding shortfall.
Key Facts
- Social Security is facing financial challenges, with its retirement trust fund projected to run out within the next decade.
- Over 50 million Americans rely on Social Security retirement benefits as a main source of income.
- A new proposal recommends capping COLA increases for individuals receiving high Social Security benefits.
- The cap would mean these individuals receive a smaller annual increase in benefits.
- The Committee for a Responsible Federal Budget estimates this change could save $115 billion over 10 years if the cap is set at the 75th percentile.
- There are alternative proposals in Congress, like taxing high earnings over $400,000 or setting up new investment funds to increase revenue.
- These proposed changes aim to address part of the long-term funding shortfall of Social Security.
