New proposal would cap Social Security benefits at $100,000

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A new proposal from a Washington think tank would cap Social Security benefits for high-income retirees.

The nonpartisan Committee for a Responsible Federal Budget has proposed a Six Figure Limit cap for couples who begin drawing benefits at full retirement age. Under the proposal, benefits for couples would be capped at $100,000 a year; benefits for singles would be capped at $50,000 a year.

The proposal comes after a recent projection shows the Social Security Administration’s trust fund would no longer be able to pay full benefits starting in 2032, just six years away.

Unless Congress intervenes before that point, recipients could see a 28% cut in monthly benefits.

$100,000 cap?

The benefits cap idea has drawn criticism from retirement groups.

“Proposals that focus on capping Social Security don’t address the problem in front of Congress: ensuring every American gets every dollar they have earned,” Jenn Jones, vice president of financial security and livable communities at AARP, said in a statement to USA Today.

Very few retirees earn $100,000 a year from benefits, the think tank pointed out. To receive that amount, retirees must have earned at least the Social Security taxable maximum – currently $184,500 – for at least 35 years and start collecting benefits after the full retirement age.

“Yet $100,000 benefits will become increasingly common as Social Security’s benefit formula leads benefits to grow over time,” the committee said.

The $100,000 cap would save the Social Security program up to $190 billion over the next decade, the think tank said.

“Given the Social Security program’s large structural funding gap, it is questionable whether the program should be distributing $100,000 a year to some of the wealthiest people in the world. As an income support program, there is a good case that Social Security should provide a base of retirement income, not a windfall,” the analysis said.

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