U.S. — Social Security's trust fund is projected to become insolvent by the end of 2032, according to the latest trustees' report. This would result in a 22% cut to monthly benefits for the program's approximately 70 million beneficiaries.

A 22% reduction to monthly Social Security checks would represent an average decrease of about $500 per month. Social Security taxes annual earnings only up to $184,500, a cap that adjusts each year to track inflation.

The share of total wages subject to Social Security taxes has declined from almost 87% in 1984 to roughly 83% today, according to the trustees' report. "The Social Security trust fund is under strain because Congress has failed to update the program for the economy we actually have," said Elizabeth Wilkins, CEO of the Roosevelt Institute. She added, "Too much income now flows to the top, where it escapes Social Security taxation."

U.S. lawmakers last overhauled Social Security in 1983 by gradually increasing the retirement age and raising payroll taxes. However, these reforms did not adjust the tax cap to account for subsequent labor market shifts. Actuarial projections relied on by Congress, said in a podcast interview, assumed the program would continue to tax about 87% of wages for the next 75 years.

From 1983 through 2000, real earnings for the top 6% of American workers increased by 62%. During the same period, the 94% of workers whose incomes were below the payroll tax cap saw average real earnings gains of 17%. The Social Security tax cap has been in place since the program's inception in the 1930s. Removing or phasing out this tax cap could address between 22% and 67% of Social Security's funding gap, according to Social Security Administration scoring. Joel Eskovitz, Senior Director of Social Security and Savings at the AARP Public Policy Institute, stated that "Social Security is a very strong program that can be fixed." Eskovitz added that "Most Americans want it to be fixed by not cutting benefits."