Social Security Could Have Paid Full Benefits Until 2059. What Went Wrong?

Social Security could have paid full benefits until 2059—25 years longer than currently projected—if the share of the U.S. economy subject to payroll taxes had remained at its 1983 level, according to a new analysis.

Under that scenario, the program would have collected an additional $10.8 trillion in payroll tax revenue and interest between 1984 and 2034.

The findings, from AARP's Public Policy Institute, come as Social Security's combined trust funds are projected to run dry in 2034. Without congressional intervention, incoming revenue would cover only about 83% of scheduled benefits that year.

And while much of the debate over Social Security's financial troubles has centered on declining birthrates and a growing number of retirees supported by fewer workers, the new analysis points to another major factor.

As more of the nation's income flows to high earners and investors, a shrinking share of the economy is subject to the payroll taxes that finance Social Security.

In 1983, wages subject to those taxes accounted for 41% of the nation's gross domestic product. By 2025, that share had fallen to just 34%.

As the rich got richer, Social Security lost ground

To understand what changed for the trust fund, it helps to take a trip back to 1984: when "Ghostbusters" dominated the box office, Madonna broke out with "Like a Virgin," and the median household income was $61,910, compared with an average of $75,850, according to U.S. Census Bureau data adjusted to 2025 dollars.

Today, those figures have climbed to $87,460 and $126,700, respectively.

That's a 41% increase in median household income, compared with a 67% increase in the average—evidence of how income growth has become more concentrated toward the upper end of the distribution.

And that's where Social Security runs into trouble.

The program collects payroll taxes on wages, but only up to an annual limit. In 2026, workers and employers each pay 6.2% on the first $184,500 of wages. So someone earning $2 million pays the same amount in Social Security payroll taxes as someone earning $184,500.

As more wage income accumulates above that ceiling, Social Security collects nothing from those additional earnings, even as they contribute to the growth of the economy.

But the problem extends beyond how wages are distributed.

Between 1970 and 2023, labor compensation's share of GDP fell from 65% to 57%, as a larger portion of national income flowed to business owners and investors through profits and investment returns.

Unlike wages, most of that income isn't subject to Social Security payroll taxes. So as economic growth generates more profits and investment returns, Social Security doesn't necessarily collect additional revenue.

And those earnings are heavily concentrated among the wealthiest Americans.

Taxpayers earning $1 million or more represented just 1% of filers in 2023 but received 48% of all investment income, according to AARP's analysis of Internal Revenue Service data.

AARP also points to the growth of businesses whose owners can receive some of their compensation as profits rather than salaries, further reducing the amount subject to payroll taxes.

Together, these changes have allowed the U.S. economy to generate substantially more income without a corresponding increase in the share subject to Social Security taxes. As a result, the program has captured a shrinking portion of the nation's economic growth, leaving less revenue available to pay future benefits.

Retirees could pay the price

Millions of older Americans are already struggling to afford their homes, leaving them particularly vulnerable to any potential reductions in benefits.

In 2023, more than 12.4 million households headed by adults 65 or older spent over 30% of their income on housing, according to Harvard University's Joint Center for Housing Studies. More than half of those households—6.7 million—spent over 50% of their income on housing alone.

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"Even without any insolvency-driven benefit cuts, millions of seniors already struggle to pay for food, basic healthcare, and even housing," Shannon Benton, executive director of The Senior Citizens League, said in a Nov. 10 statement.

And retirees could face those cuts sooner than the combined trust fund projection suggests.

The separate trust fund responsible for retirement and survivor benefits is projected to exhaust its reserves in 2032, two years before the hypothetical combined funds. Without congressional intervention, incoming revenue would cover only 78% of scheduled retirement and survivor benefits.

Based on the average retired worker monthly benefit of $2,089 in September 2026, a 22% reduction would amount to roughly $460 a month.

Congress faces a choice over who pays

Now, advocates warn that decisions over Social Security's financing can no longer be deferred.

"The incoming class of senators face an enormous responsibility," Benton said, noting that their six-year terms will run through January 2033—past the point when Social Security's retirement and survivors trust fund is projected to exhaust its reserves.

Richard W. Johnson, vice president of financial security at AARP’s Public Policy Institute and author of the analysis, argues that strengthening Social Security requires bringing its financing into line with the modern economy.

"Strengthening Social Security does not require re-creating the economy of 1983," he said. "It just means updating Social Security's financing to reflect how Americans receive income today."

And it was a popular idea on the 2026 midterm campaign trail, too.

In October, Sherrod Brown, who won Ohio's Senate race, called for higher earners to contribute more "by raising the tax cap so we can extend the life of the program."

Troy Jackson, Maine's senator-elect, went further, calling for eliminating the cap altogether.

"Making sure that wealthier people pay the same rate that working class people do would definitely strengthen the Social Security system overall," Jackson said in a September TV interview.

The idea has also drawn bipartisan interest, with Sens. Bernie Moreno (R-OH) and Elizabeth Warren (D-MA) jointly proposing the elimination of the cap in June.

Based on Social Security actuaries' 2025 assumptions, eliminating the cap could close about 67% of the program's 75-year financing gap if higher contributions didn't generate additional future benefits—or roughly half if they did.

Other proposals would tax certain business and investment income that currently falls outside Social Security's revenue base.