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Some lawmakers want to take Social Security away from the high earners. would it be?

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Social security is on shaky economic ground. In years to come, the program is expected to generate more profit than profit as baby boomers leave the workforce and shrink its primary source of revenue – payroll taxes.

If lawmakers fail to pump more money into Social Security, the program may have to cut benefits universally if the trust fund runs out of money. And we could be in that position in a little over a decade.

Lawmakers, of course, don’t want that. So many seniors get most of their income from Social Security. If benefits are reduced, this could lead to a huge poverty crisis among the elderly.

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As such, lawmakers have thrown up a variety of ideas that could help raise Social Security finances. These include raising the full retirement age (the age at which recipients can claim their monthly benefits in full), raising the wage threshold for Social Security taxes, and raising the Social Security tax rate itself.

There is also a less popular solution introduced into the mix. It’s called the means test, and it can go a long way toward making Social Security more solvent. But it’s also a highly controversial concept that can put high earners on the backburner.

How means testing can work for Social Security

Currently, social security eligibility is not dependent on retirement income. If you qualify for a certain allowance based on your earnings, this is the allowance you are entitled to as a senior. It doesn’t matter if your annual income at the time of your Social Security claim is $20,000 or $2 million.

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This means that the test will try to convert it. The means test looks at the income of Social Security recipients to determine whether they are entitled to benefits — and denies benefits to higher earners.

As an arbitrary example, lawmakers could decide that someone who earns more than $250,000 a year in retirement is not eligible for Social Security at all. Or there could be a phase-out, where you can claim your full Social Security benefits until your earnings exceed $150,000, but benefits are gradually reduced from there until they reach $0. does not decrease.

The reasoning behind the test is somewhat understandable. A senior with an annual income of $4 million probably doesn’t need his monthly Social Security check, so why give that person that money while the program is on hold?

But the problem is that all employees pay into Social Security with the promise of receiving monthly benefits over the course of their careers. And changing that story won’t sit well with a lot of people.

It’s also easy to argue that this means plain testing is not appropriate. Let’s say someone paid into Social Security during his career when his income wasn’t that high, giving up the needed money at that time. If that person earns money later in life, he will not receive any benefit despite that sacrifice.

That’s why taking Social Security benefits away from the wealthy is far from the most talked about solution to the program’s financial problems. but this Is An option that has been offered in the past, so we can’t assume it’s definitely off the table. It’s something high earners — or those expecting high incomes when they retire — should at least be aware of.

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