Social Security’s retirement trust fund is now projected to run short of reserves in the fourth quarter of 2032. If Congress does nothing, ongoing payroll taxes would still cover most benefits, but only about 78% of what retirees are scheduled to receive. That is the equivalent of a roughly 22% reduction, a potentially serious hit for households that depend on monthly checks for housing, food, healthcare, and other essentials.
A new bipartisan proposal would attack the shortfall by removing the wage cap on Social Security taxes, a change its sponsors say could raise about $3 trillion over 10 years. The plan would not solve every problem, but it could materially change the outlook.
The 22% Social Security Cut Retirees Could Face
The latest Social Security trustees report draws an important distinction. The Old-Age and Survivors Insurance Trust Fund, which pays retirement and survivor benefits, is projected to deplete its reserves in late 2032. At that point, incoming revenue would cover about 78% of scheduled benefits.
The disability fund is in much stronger condition, and a hypothetical combination of the two funds would remain fully funded until 2034, when about 83% of combined benefits could be paid. None of this means Social Security disappears. It means benefits could no longer be paid in full under current law unless Congress increases revenue, reduces costs, or adopts a package containing both.
The Bipartisan Plan to Tax More High-Income Wages
The proposal comes from an unusual bipartisan pairing: Democratic Sen. Elizabeth Warren of Massachusetts and Republican Sen. Bernie Moreno of Ohio. In a June 2026 opinion piece, they said they were working on legislation to remove the cap on earnings subject to Social Security payroll taxes. In 2026, employees and employers each pay 6.2% on wages up to $184,500, while self-employed workers pay the full 12.4%.
Earnings above that limit are not taxed for Social Security. Warren and Moreno argue that lifting the cap would require high earners to contribute the same share of wages as workers whose entire paychecks fall below the taxable maximum.
What the Estimated $3 Trillion Would Actually Do
The headline figure needs context. Warren and Moreno cited an estimate that eliminating the wage cap could bring roughly $3 trillion into Social Security over the next 10 years. However, they had not yet released full legislative language detailing whether newly taxed earnings would also generate larger future benefits. That choice matters.
Social Security actuaries estimate that taxing all wages without granting additional benefit credit would eliminate about 67% of the program’s 75-year shortfall. If higher taxed earnings also increased benefits under the regular formula, the improvement would be smaller, closing about 48% of the gap. Either design would help, but neither would permanently fix the system by itself.
Other Ways Congress Could Prevent Benefit Cuts
Congress has several other levers available, although each creates winners and losers. Lawmakers could gradually raise the 12.4% combined payroll tax rate, increase the taxable wage base without eliminating it, raise the full retirement age for future retirees, reduce benefits for higher earners, or combine smaller changes across several categories.
The current full retirement age is already 67 for people born in 1960 or later. Raising it further would generally reduce lifetime benefits for affected workers, especially those who cannot remain employed longer. A broad payroll tax increase would spread the cost across workers and employers rather than concentrating it on people earning above the current cap.
What Retirees and Near-Retirees Should Know
For current retirees, the proposal does not change checks today, and a 22% reduction in 2032 is not guaranteed. Congress could act before the trust fund reaches depletion, as it has during past financing crises. Still, retirement plans should not assume lawmakers will preserve every scheduled dollar without changes.
People nearing retirement may want to build flexibility through emergency savings, manageable withdrawal rates, and a claiming strategy based on their own health, work plans, and household needs. The larger lesson is that lifting the wage cap could buy meaningful time, but the longer Congress waits, the more abrupt any eventual tax increases or benefit adjustments may need to be.