Could Social Security cuts actually benefit some people?
According to the Social Security Administration (SSA), nearly 75.5 million Americans rely on the benefits that Social Security pays to retirees, survivors and the disabled, with the average retired worker collecting $2,081 per month.
The SSA has found a way to pay its promised obligations since the program began in the 1930s. However, a century later, that record is in danger. The SSA reports that the trusts that fund the program are on pace to be depleted between 2033 and 2035. If that happens, Social Security would have to rely on incoming payroll taxes alone and the SSA would be able to pay only 75% of promised benefits.
Just Relax: I’m a Financial Advisor: Here’s How Often You Should Check Your Retirement Account Balance
Try It:Start Growing Your Net Worth With Smarter Tracking
While no lawmaker has dared to formally propose legislation to scrap Social Security altogether, several have alluded to doing away with it, a move that would plunge tens of millions of households into poverty.
However, not many, but some people might be better off without it, including the following.
High Earners
Social Security is funded through payroll taxes, with employers and employees each paying 6.2% of the 12.4% total. However, the SSA caps the amount of income that can be taxed. In 2026, the maximum is $184,500.
Households earning that amount or more will pay $11,439 to fund the program this year. Without that tax, they could keep that income as take-home pay and, since high earners are less likely to need extra money for immediate expenses, invest it for their future without relying on Social Security.
Additionally, since the SSA calculates benefits using a progressive formula that pays a greater percentage of lower earnings, high-income households see much less of their income replaced, and might be better off keeping their payroll taxes now than collecting benefits in the future.
Business Owners
While employees cover half of the 12.4% payroll tax that funds Social Security, their employers are responsible for the other 6.2%. As the Small Business Administration and business lenders like Huntington National Bank point out, planning for payroll taxes is an unavoidable, ongoing burden that consumes much of a typical business owner’s time and energy.
While they would have to plan for their own financial futures if Social Security disappeared, they would have that 6.2% as investable capital to grow and expand their businesses year after year.
The Self-Employed
If you work for yourself, you get to be your own boss — but the tradeoff is that you have to pay your boss’ share of the Social Security tax, too. It’s called the self-employment tax, which requires freelancers and independent contractors to pay the full 12.4% by themselves, without any increase in future benefits.
While they would bear sole responsibility for financing their own retirements, the self-employed — particularly those with high incomes — might stand to benefit the most, as they could save twice as much as business owners and wealthy employees.
Without the burden of the self-employment tax, a self-employed individual who earns $184,500 or more in 2026 would keep $22,878 to invest for a future without the safety net.
Summer spending adds up fast. Enter MoneyLion’s Summer Break Giveaway for a chance to win $500— and give your budget a break. (No pur. nec. Ends 7/4/26. See official rules at mlion.info/summerbreakofficialrules)
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
More From MoneyLion:
