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Social Security & Medicare · Report · File No. 261112-571

AARP: Social Security could pay full benefits to 2059 if its tax base had kept pace

A new AARP study says the share of the economy taxed for Social Security has shrunk over 40 years, costing the program $10.8 trillion. That shifts the blame for the coming shortfall away from retirees and points to the tax cap, as lawmakers argue over cutting benefits or raising revenue.

By the Kitchen-Table Desk · · 4 min read

Every quote in this story (4) was matched word for word against its source. How we work

My clippings
Ron Wyden
Ron Wyden. Photo: U.S. Senate Photographic Studio, Public domain

A new report from AARP, the nation's largest group for people 50 and older, says Social Security's money problem isn't only about baby boomers retiring. The report was released Nov. 10 by AARP's research arm, the Public Policy Institute. It says the program could pay full benefits until 2059 if the wages it taxes had kept growing as fast as the overall economy 21.

That is 25 years later than the current forecast 1. In June, Social Security's trustees, who publish a yearly checkup on the program's finances, projected that the combined trust funds would run dry in the third quarter of 2034. At that point incoming taxes would cover 83% of scheduled benefits 1. The retirement fund on its own is projected to run out sooner, in late 2032, when 78% of benefits would be payable 1.

Where the money went

Social Security runs mainly on a payroll tax. Workers pay 6.2% and employers pay 6.2%, on wages up to a yearly limit 5. Payroll taxes made up 91% of the program's income in 2025 1.

The report finds that the slice of the economy subject to that tax has been shrinking. Taxable wages fell from 41% of gross domestic product (GDP), the total value of everything the economy produces, in 1983 to 34% in 2025. The trustees expect that lower level to last 1. If it had stayed at 41%, the program would have collected an extra $10.8 trillion between 1984 and 2034, in 2025 dollars 1.

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Why the drop? The report points to three things. More income now goes to high earners above the tax limit. Corporate profits and investment returns aren't taxed for Social Security. And some business owners take their income as profits through S corporations, a common business setup, which avoids the payroll tax 3. Workers' share of GDP fell from 65% to 57% between 1970 and 2023. And from 1979 to 2019, pay adjusted for inflation rose 41% for workers near the top (the 90th percentile) but only 7% for those near the bottom (the 10th percentile) 3.

The fix for Social Security isn't cutting earned benefits; it's rebuilding the revenue behind them
Richard Johnson, Vice President of Financial Security, AARP Public Policy Institute1

When Congress passed its last major Social Security rescue in 1983, the payroll tax reached about 90% of all wages 3. Today the cap covers about 83% 1. The cap is $184,500 this year and rises to $192,300 in 2027. Only 6% of people earned at or above it in 2024 1.

Retirees paid for part of that 1983 deal. It raised the full retirement age from 65 to 67, delayed a cost-of-living adjustment (COLA), the yearly inflation raise, by six months, and started taxing benefits. AARP estimates those changes cut lifetime benefits by about 19% for people turning 65 this year 1.

Social Security isn't facing insolvency because retirees are taking out too much
Bill Sweeney, Senior vice president for government affairs, AARP3

Bill Sweeney, AARP's senior vice president for government affairs, aimed the report at "groups in Washington peddling the idea that we should raise the retirement age and cut Social Security" 3.

What the fixes would do

The report doesn't claim that one change fixes everything. According to AARP's analysis of Social Security Administration estimates, removing the tax cap would close 67% of the program's 75-year funding gap, as long as high earners got no bigger benefits in return 1. A new 12.4% tax on investment income for active S corporation officers and limited partners would close about 25% 1.

Lifting the cap has won over at least one Republican. In a June op-ed, Sen. Elizabeth Warren, D-Mass., and Sen. Bernie Moreno, R-Ohio, said they were jointly writing a bill to eliminate the Social Security tax cap 5. They cited an estimate that removing the cap would raise "around $3 trillion" over 10 years. They also cited a 2025 poll in which 65% of Democrats and 62% of Republicans supported lifting it 5. Moreno has since been chosen to run the Senate Republicans' campaign arm 7.

Other Republicans have pushed back on fixing the program mainly with new taxes. At a June 24 hearing of a Senate Finance subcommittee, its chairman, Sen. Chuck Grassley, R-Iowa, said the gap "cannot realistically be plugged simply through tax hikes on the wealthy" 4. At the same hearing, Sen. Thom Tillis, R-N.C., asked why slowly raising the retirement age should be off the table 4.

Chuck Grassley
As in 1983, Republicans and Democrats will need to sit down together to consider a wide range of reform options.
Chuck Grassley, U.S. senator, R-Iowa4

Sen. Bernie Sanders, I-Vt., who votes with Democrats, has a bill that would apply the payroll tax to income above $250,000, including investment income 4. At the hearing he said his goal is to "increase Social Security benefits, expand the solvency of Social Security" 4. A witness from a small-business group estimated the bill would add $33.8 trillion in new taxes 4.

Sen. Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee, says billionaires should "pay their fair share" through payroll and income taxes 6. He has also warned that a commission plan backed by Republicans would "rubber stamp benefit cuts like increasing the retirement age" 6.

Ron Wyden
without a single dime cut to a current or future retiree
Ron Wyden, U.S. senator and top Democrat on the Senate Finance Committee, D-Ore.6

Why the timing matters

That matters because waiting makes the fix harder. At the June hearing, Sen. Bill Cassidy, R-La., warned that delay would turn the projected 22% cut into a 28% cut 4. Shai Akabas of the Bipartisan Policy Center estimated that the 2032 cut would cost a married couple who both earned average wages about $10,600 a year 4.

The pattern is clear. One side treats the shortfall as a reason to look at the retirement age and benefits. The other says the problem started with the money coming in. AARP's report gives the second argument fresh numbers just as the lawmakers who take office in January start working on a solution.

The Record

  1. Sens. Elizabeth Warren (D) and Bernie Moreno (R) publish an op-ed saying they are writing legislation to remove the Social Security tax cap 5.
  2. At a Senate Finance subcommittee hearing, Chairman Chuck Grassley says the gap cannot be closed simply through tax hikes on the wealthy 4.
  3. Sen. Ron Wyden warns that a Social Security commission would rubber-stamp benefit cuts such as raising the retirement age 6.
  4. AARP's Public Policy Institute reports that a shrinking payroll tax base cost Social Security $10.8 trillion and cut 25 years off the trust fund's life 2.
  5. CNBC reports AARP's finding that full benefits could have lasted until 2059 if taxable wages had kept pace with GDP 1.
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Sources

  1. CNBC, “Social Security could pay full benefits until 2059 if taxable payroll kept pace with GDP: AARP report” (2026-11-11). cnbc.com/2026/11/11/social-security-benefits-taxable-payroll
  2. AARP Public Policy Institute, “Shifting Income Patterns Have Shortened the Life of Social Security's Trust Fund by 25 Years” (2026-11-10). aarp.org/pri/topics/work-finances-retirement/social-security
  3. AARP, “How Income Inequality Affects Social Security” (2026-11-10). aarp.org/social-security/income-inequality-affects-shortfall
  4. Thomson Reuters Checkpoint News, “Senators split over tax fixes as Social Security insolvency looms” (2026-06-29). tax.thomsonreuters.com/news/senators-split-over-tax-fixes-as
  5. Office of Sen. Elizabeth Warren, “Warren, Moreno Pen NYT Op-Ed: Our Bipartisan Plan to Save Social Security” (2026-06-23). warren.senate.gov/newsroom/press-releases/warren-moreno-pen-
  6. Senate Finance Committee (Democrats), “Wyden Warns Social Security Commission Is Fast Track for Gutting Benefits” (2026-08-05). finance.senate.gov/ranking-members-news/wyden-warns-social-s
  7. Arcamax (wire politics roundup), “Politics news headlines: Republican campaign chiefs picked” (2026-11-11). arcamax.com/politics/politicalnews/s-2728870-p1

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