This originally appeared in The Washington Post, and now I’m seeing headlines like this all over the place. At first, that sounds fair, right? But here’s what they’re not telling you. This proposal could cap your benefits at $50,000 a year or even less, even if you’re not rich. And it could actually stop your Social Security from growing in the future, even if you’re not anywhere near that level today.
That’s the part that nobody is talking about when they’re presenting this so-called six-figure limit, because it’s buried deep in the fine print, and you won’t see it unless you look.
This is a transcript of our video. You can watch the full video on our YouTube channel: Low Income Relief.
Who Actually Gets That Much?
Let’s start by addressing the elephant in the room. Yes, it is true that some households are pulling more than $100,000 in Social Security a year, but this is a very rare situation. Very few people are getting that much. And those are couples who earned so much that they paid close to the taxable maximum their whole careers.
But of course, they’re using this extreme example to push cuts that could hurt people who make much, much less.
Right now, this proposal is being talked about, and it’s called the six-figure limit. The way that it’s being sold is fairly simple. They say they’re limiting benefits for wealthy retirees because nobody really needs over $100,000 in Social Security benefits.
Like I said earlier, there are a lot of headlines about this right now. And honestly, they’re designed to get a reaction, because when I saw that, I was like, “Oh my gosh.” Right? People are getting $100,000? Because most of the people I know are struggling on less than a quarter of that.
And if you’re already struggling to afford groceries or you’re skipping meals like so many of the seniors I know, this can feel really frustrating and really unfair, especially when you’re also hearing that Social Security might run out of money soon and benefits could be cut 23 to 28% in just a couple of years.
But you have to cut through that initial rage reaction in order to see what is actually being presented here. Because buried in the fine print is this little phrase that says that this cap would be adjusted based on marital status and claiming age. That means that the cap changes based on your unique situation. And in a lot of cases, the cap that they’re pushing for is way less than $100,000.
How the Cap Could Actually Work
Let’s break this down step by step so you can see how this would actually work.
So, let’s say you’re single. Under this proposal, your Social Security benefits wouldn’t be allowed to go above $50,000 a year. And that would be your cap no matter how much you put in and no matter how much your Medicare premiums cost or any of that.
But what if you claim early? If you claim early at age 62, that cap doesn’t stay at $50,000. It could drop closer to $35,000 a year for a single person. So now you’re not just dealing with reduced benefits from claiming early, you’re also dealing with a lower ceiling on what you can receive at all. And you can see there is a huge difference between $35,000 a year and $100,000 a year.
So now let’s say you’re married. At first glance, you might just assume, okay, all of that is going to double. And I mean, on the surface, yeah, your max cap for a married couple would be $100,000 at full retirement age. If you both work until 70, that cap is actually $124,000 under this proposal. But if both spouses claim early, the combined cap would be around $70,000.
It gets really complicated if both of you decide to claim at different ages, though, because then your limits are mixed based on when each individual decided to claim their benefits. So under this proposal, you’d have a system that’s not just capped, it’s also complicated.
And if you’re a widow or a widower, you could be looking at a completely different cap. They haven’t finalized it yet, but they proposed setting that somewhere between what individuals and couples receive, maybe around $75,000 a year. So depending on your situation, your limit isn’t even fixed. It shifts and changes with time.
Why This Could Affect More People Over Time
So this clearly is not just a cap on the rich. This reaches much further into the system than most people realize. And it really does hurt the middle class. It could even eventually hurt lower-income people too, because here’s the part that no one else is talking about, right?
This isn’t just a cap on people who are getting really high benefits today. It also puts a ceiling on how much your benefits can grow in the future, because right now your Social Security checks go up over time with COLAs to help keep up with inflation. But if there’s a cap in place, there will come a point where those increases could stop, even if your costs keep rising.
So even if you’re nowhere near these limits today, this could still affect you later. You could hit the ceiling years or even decades down the road. And once you do, your benefits could stop growing while your groceries, rent, and medical costs keep going up, and your Social Security wouldn’t keep up anymore. Not that it does a great job of keeping up anyway, but that’s a different conversation.
Now, hopefully you can see why this could become a serious problem over time.
What Supporters Say
Now, I do want to be fair on this proposal here. This is not all bad news. Supporters say that this could help keep Social Security funded longer. The group behind it, called the Committee for a Responsible Federal Budget, says that about one-third of benefits go to retirees with incomes over $100,000.
Now, to my understanding, that’s total income and not Social Security income.
Their argument is basically that if we cap the Social Security payments for those higher earners now, it could reduce how much lower-income people get cut later if the trust fund runs out. And that is great. I get that. That is a major concern.
But I have two big problems with this proposal, and if you stick with me, I think you’ll understand where I’m coming from.
My Biggest Concerns With This Proposal
Number one, they’re talking about this like it’s only going to affect the rich, like they’re only targeting people who get over $100,000 a year, and it just isn’t what’s actually in the proposal. When you look at the fine print, it affects a lot more people than that. We’re talking about the cutoff being $35,000 a year. For some people, this is a big deal, and it’s not being represented in the headlines and in the conversations about this proposal.
So that feels misleading and icky to me. If they want to do this, I feel like they should be a lot more upfront with what they’re actually trying to do instead of framing it like it’s just about millionaires when it’s actually regular middle-class retirees that could be impacted by this.
Now, this quote really bothers me. This is in the Washington Post article, and it says, “Politicians have told seniors that they are simply getting back the money they paid in, but that’s not true. It is a strange sense of morality which says that because the government lied to past generations, it is bound to continue lying to current and future generations.”
That wording really bothers me because it sounds like they’re saying all the promises that were made to you about Social Security are a lie. And that is a very dangerous precedent that could lead to a lot more changes and a lot more unpredictability in this program.
So I really just don’t like the way they’re talking about this proposal. Between that quote and just the blatant misrepresentation of who might be affected by this, it feels really sneaky, and I’m really just uncomfortable with that framing.
Now, I will say that they have estimated that 70% of retirees won’t be affected by this proposal, and that is a good thing, probably. But with all of the other misrepresentation around this proposal, I think it’s important to point out that saying that 70% of retirees won’t be affected right now is a very different thing than saying that they won’t ever be affected in the future.
And that’s why the way this is talked about really matters. If everyone believes this is just about cutting benefits for the ultra-rich, most people will ignore it. But when they realize that this actually reaches further into the middle class and possibly beyond, that’s a very different situation, and it’s one that people deserve to understand clearly.
