Social Security is a cornerstone of financial security in America, providing a vital safety net for millions. With significant proposed changes and adjustments on the horizon, it’s crucial for retirees, those planning for retirement, and every working American to understand these shifts for effective financial planning.
Since its inception in 1935, signed into law by President Franklin D. Roosevelt, Social Security has transformed the landscape of poverty in America. Before the program, a staggering 50 percent of the nation’s seniors lived in poverty, a stark reality shared by countless Americans with disabilities and surviving dependents of deceased workers. Nearly 90 years later, this figure has dramatically decreased, with the senior poverty rate now standing at a significantly lower 9.7 percent.
The program’s impact on poverty is undeniable, as it lifted 27.6 million Americans out of poverty in 2023, including over 19.5 million seniors. Even during the challenging Covid-19 pandemic in 2021, it demonstrated its resilience by lifting 26.3 million people, including over 18 million seniors, out of poverty.
Despite this remarkable legacy of success, the program faces significant financial pressures that demand attention and innovative solutions. The Social Security Administration’s chief actuary and the Congressional Budget Office have both issued warnings that the trust funds relied upon to pay benefits are projected to face depletion. Projections indicate that the trust funds may be unable to pay full benefits starting in 2035, with some forecasts suggesting depletion as early as 2033, which could result in a 23 percent cut in planned benefit payments by 2034 if no action is taken.
Amidst its vital role and looming challenges, ambitious legislative proposals like the Social Security Expansion Act have emerged. This bill, supported by key senators and representatives, aims to boost current benefits and strengthen Social Security’s long-term financial health for future generations.
A key feature of the Social Security Expansion Act is its innovative funding approach, proposing to apply the 12.4 percent payroll tax to all incomes above $250,000. This differs from the current system where, in 2025, taxes are only applied to the first $176,100 earned annually.
As Senator Sanders pointed out, ‘a Wall Street CEO who makes $30 million pays the same amount into Social Security as someone who makes $160,000 a year.’ This change seeks to correct this perceived inequity, ensuring the wealthiest contribute proportionally, and actuarial projections suggest it would extend solvency for at least 75 years.
Beyond solvency, the Act offers tangible relief by proposing an average monthly increase of $200 ($2,400 annually) for beneficiaries, by adjusting the benefit calculation formula to favor lower-income seniors, though most beneficiaries are expected to see higher payments.
The bill also addresses the critical issue of how cost-of-living adjustments (COLAs) are calculated, aiming for a more accurate reflection of the financial realities faced by seniors. It proposes changing the cost-of-living index from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to the Consumer Price Index for the Elderly (CPI-E). The CPI-E is a statistic developed by the Bureau of Labor Statistics that weighs inflation specifically to account for the spending patterns of those aged 62 and older, particularly their higher proportional spending on healthcare. While the Bureau has cautioned about limitations such as a smaller sample population and a lack of official usage, proponents argue it offers a more appropriate measure for seniors’ actual expenses, potentially increasing COLAs by “0.2 percentage points per year on average.”
Further strengthening the safety net, the Social Security Expansion Act aims to lift the lowest-income workers out of poverty by improving the Special Minimum Benefit. It would increase this benefit to 125 percent of the poverty line, translating to “over $18,000 for a single worker who had worked their full career.” Additionally, the bill proposes increasing the first income-percentage “bend point” from 90 percent to 95 percent, meaning that 95 percent of the first $1,115 in monthly wages (for 2023, indexed to inflation) would count toward Social Security benefits. This strategically frontloads benefit increases, ensuring that low-income workers proportionally benefit more.
This comprehensive legislation has garnered substantial support from numerous senators and 24 cosponsors in the House, alongside endorsements from over 25 prominent advocacy and labor groups, showcasing a broad coalition backing its goals.
Public opinion strongly favors this bill, with Data for Progress polling showing 78% of likely voters support it, including significant bipartisan backing: 85% of Democrats, 75% of Independents, and 72% of Republicans. As Alex Lawson of Social Security Works stated, ‘This bill is the answer…It protects and expands benefits, and it is fully paid for by finally requiring the wealthy to contribute their fair share.’
While the Social Security Expansion Act represents a bold step towards expanding benefits and securing the program’s future, it is not the only significant legislative effort underway. Another noteworthy proposal is the Senior Citizens Tax Elimination Act, introduced by Representative Thomas Massie. This bill aims to fulfill a promise made on the campaign trail by former President Trump, seeking to remove income taxes on all Social Security benefits.
Representative Massie argues that it is “unfair double taxation” for seniors to pay income taxes on their Social Security benefits, given that they have already paid tax on their contributions via the payroll tax. He emphasized that his bill “would exempt Social Security retirement benefits from taxation and boost the retirement income of millions of older Americans.” While this proposal is not new, having been first introduced by Rep. Ron Paul in 2003, and subsequently by Massie in each Congress since 2012, it now appears to have a renewed prospect of passing.
Furthering fairness, the Social Security Fairness Act, passed in early 2025, has eliminated the Windfall Elimination Provision and the Government Pension Offset, which previously reduced benefits for those receiving government pensions, thus providing much-needed relief and equity.
Legislative efforts also focus on administrative improvements and fiscal integrity, with proposals to increase funding for the Social Security Administration to reverse office closures, extend hours, and reduce the nearly two-year backlog for disability benefits. The Social Security and Medicare Lockbox Act aims to protect surplus funds by restricting investment methods, ensuring long-term sustainability.
