Proposal Aims to Cap Social Security Benefits Above $100,000 for Couples to Address Program's Solvency

Some retired couples receive more than $100,000 in Social Security benefits each year. One recent proposal suggests capping these benefits to help extend the program.

More than 1.25 million retirees, or about 2% of all Social Security beneficiaries, receive $50,000 or more in benefits each year.12 That means some couples receive combined benefits of $100,000 or more a year. This generally occurs when both parties consistently earned more than the Social Security taxable maximum for 35 years and retired at their full retirement age. And the benefit amounts for couples with six-figure benefits will continue to rise through the annual Cost of Living Adjustment.

However, the Committee for a Responsible Federal Budget, a nonpartisan, nonprofit organization that conducts fiscal policy analysis, proposed capping a couple's annual benefits at $100,000. Initially, this proposal could save the program $100 billion to $190 billion over 10 years.3

“Social Security is less than seven years from insolvency, and under the law, when it becomes insolvent, everybody's benefits get cut 24%...which for a typical couple retiring in 2033 is like $18,000,” said Marc Goldwein, senior vice president and senior policy director at the Committee for Responsible Federal Budget. “So the question is, what are we going to do to avoid that?"

Most policy analysts say either tax rates need to increase or benefits need to be reduced, Goldwein said. While the "Six-Figure Limit" alone is not enough to delay Social Security's insolvency cliff, combined with other solutions, it would help extend Social Security's lifespan.

The main trust that is funding the Social Security program is set to run out of money by 2032. After that point, the law dictates that all benefits will be reduced, which the majority of beneficiaries say they will not be able to financially survive if their payments are cut.

This proposal would still reward beneficiaries with higher benefits who wait to claim benefits until after their full retirement age. Beyond that, there are three ways this proposal could be implemented:

These solutions would generally only lower the benefits of the top 20% to 30% of earners, the CRFB said.

"If you're getting $100,000, as a couple, in benefits, you probably have tens of millions of dollars in assets, and your Social Security benefit is not very important to you," Goldwein said. "Over time, as this phases in, it's going to affect more people further down the income ladder, but every version that we model [is always] incredibly progressive.”

The 30-year fixed cap proposal provides the greatest savings, reducing the Social Security budget shortfall over 75 years by 55%, according to CRFB estimates.

"This approach may prove effective in generating upfront savings and 'buying time' for other solvency-enhancing policies to phase in," authors of the CRFP report said.