Updated

Updated · AS USA · Jul 18

SSA Bases Retirement Checks on 35 Years of Earnings, With Benefits Topping $5,000 at 70

Updated

Updated · AS USA · Jul 18

SSA Bases Retirement Checks on 35 Years of Earnings, With Benefits Topping $5,000 at 70

Q: Could one policy change—lifting the payroll tax cap—be the key to solving Social Security's financial crisis for decades?

No. Lifting the payroll tax cap would materially improve Social Security’s finances, but by itself it is not expected to solve the program’s shortfall for decades. The cap now limits Social Security payroll taxes to wages up to $184,500 in 2026. Removing or raising that ceiling would bring in much more revenue from high earners. Estimates cited in policy analyses suggest it could close roughly more than half to about two-thirds of the 75-year funding gap, depending on how the change is designed and whether extra taxed earnings also generate higher future benefits. That is significant, but it still leaves a sizable gap. The latest projections show the combined trust funds depleted around 2034, after which incoming revenue would cover only about 81% of scheduled benefits. Even a full repeal of the cap enacted now is generally not projected to restore permanent solvency on its own; some analyses say it would extend solvency by about two decades, not indefinitely. Timing matters. Analysts note that if lawmakers had acted years ago, lifting the cap might have gone much further. Because the deficit has widened, a single fix is now less effective than it once was. The evidence points to a broader package: some mix of higher revenue, slower benefit growth for some future recipients, or other formula changes. Lifting the payroll tax cap is one of the strongest available tools, but not a stand-alone cure.

3 articles · Updated · AS USA · Jul 18

More than 55 million retired workers get Social Security payments calculated from a personalized formula built from each worker’s earnings record, with the average retirement benefit at $2,029.92 in June 2026.
The SSA first indexes lifetime wages and uses a worker’s 35 highest-earning years to compute Average Indexed Monthly Earnings, with taxable earnings capped at $184,500 in 2026.
That AIME then feeds into the Primary Insurance Amount formula: 90% of the first $1,286, 32% up to $7,749, and 15% above that level for claims at full retirement age.
Claiming age can materially change the check size—starting at 62 cuts benefits by more than 25%, while waiting until 70 can lift monthly payments by 25% or more to above $5,000.
The agency says workers can review earnings histories and estimate future checks through their Social Security Statement and Online Benefits Calculator on the mySocialSecurity portal.