Senator Bernie Sanders is pushing to expand Social Security benefits, which are
essential to many Americans’ retirement plans. In a recent “Dear Colleague” letter, Sanders called on Democrats to
ensure that Social Security benefit cuts never happen and, instead, to take
steps to expand Social Security by scrapping the payroll tax cap.
With the future of Social Security uncertain at the moment, here’s what you
should know about what’s happening to the program, what Sanders’ proposal might
accomplish, and how it might affect your financial fitness.
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The Social Security insolvency problem
In his letter, Sanders outlines the issue of Social Security’s approaching trust
fund insolvency. The Social Security Administration’s 2026 report found that by
2032, the Social Security Trust Fund may become depleted. At that time, the
program could cover just 78% of the benefits required for the more than 70
million Americans who depend on them.
If the trust fund becomes depleted, Social Security benefits might be cut by
22%, leaving retirees to get by on less. A 22% cut could reduce the average
monthly benefits from $2,083 to $1,625.
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The payroll tax cap and how it might help
The Social Security program is partially funded by payroll taxes. In 2026,
workers and employers each pay a 6.2% tax on earnings, but the tax is capped on
the first $184,500 an individual earns each year. Any income above that
threshold isn’t taxed, so high earners aren’t paying Social Security payroll
taxes on their full income.
In his letter, Sanders points out the fact that Elon Musk, who is worth an
estimated $690 billion, pays the same taxes to Social Security as someone who
earns $184,500 a year. “That is grossly unfair,” writes Sanders. “That has got
to change.”
How Sanders wants to change the payroll tax cap
Sanders proposes lifting the payroll tax cap and applying the tax to all income
above $250,000 per year, including investment income. Since the bottom 91% of
Americans earn less than $250,000 per year, Sanders argues that this change
would not increase taxes for most.
According to Sanders, the Chief Actuary of the Social Security Administration
found in 2023 that applying the payroll tax to all income above $250,000 per
year could extend the Social Security program’s life for 75 years. Doing so
would also allow for the increase of benefits by $2,400 per year, while helping
lift millions of seniors out of poverty and expanding the cost-of-living
adjustments (COLAs).
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Who would be affected
Under Sanders’ proposal, most current and future Social Security beneficiaries
would see higher benefit payments without experiencing a tax increase. High
earners making more than $250,000 per year would pay more in payroll taxes.
Increased benefits could potentially have a tremendous effect on some of the
poorest individuals in the country. According to Sanders, more than 20% of
American seniors are trying to survive on less than $15,000 a year, while nearly
half try to survive on less than $30,000 annually. A benefits boost could help
the most vulnerable Americans.
What Sanders thinks of the PROMISE Act
Sanders also takes aim at the PROMISE Act, a proposal to require the Social
Security Advisory Board to create a proposal to make Social Security solvent for
50 years. Sanders criticizes the lack of transparency, accountability, and
meaningful public input.
He also highlights that the PROMISE Act would require Congress to vote on the
proposal during the lame-duck session after November elections. At that time,
Republicans would still control the Senate and the House. “In other words,
Members of Congress who have been defeated at the polls or who have chosen to
retire could determine the future of Social Security for the next half century,”
writes Sanders.
What experts say about Sanders’ plan
Sanders’ plan is not without its drawbacks. Analysts say that while lifting the
cap is a feasible option, doing so won’t solve Social Security’s insolvency by
itself. Instead, lifting the cap would need to be combined with other solutions,
though the idea is a step in the right direction.
Additionally, while Sanders’ idea would benefit many Americans, it would likely
face steep political odds because Republicans consistently oppose ideas that
increase payroll taxes on high earners. Sanders has previously introduced
similar legislation that hasn’t advanced through Congress, so it’s unlikely that
this idea would be successful.
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Bottom line
Sanders’ “Dear Colleague” letter urges Democrats to take a public stand, but at
this point, his idea would likely face steep opposition. Congress remains
divided about how to address Social Security’s insolvency issue, and any change
would need to pass both chambers and receive a presidential signature.
Since Social Security’s future is uncertain, this is a good time to stress-test
your retirement budget to see how you would fare if your Social Security
benefits were reduced. Doing so may help you gauge whether you’re on track for retirement or
if you may need to make some adjustments to your budget.
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