Social Security is an enormously popular program and serves as the basis of most Americans’ retirement plan. But the program faces long-term financing problems and the combined Social Security trusts funds, which help pay for current benefits, are expected to be exhausted by 2035 unless Congress takes steps before then.

While both political parties have pledged to protect Social Security, neither have outlined a specific timetable or offered detailed proposals to stabilize the program’s finances. Former President Trump has proposed eliminating income taxes on Social Security benefit, but that move would accelerate the funding short fall as such tax revenue generated about $50 billion last year to help fund Social Security benefits.

Regardless of which party wins the White House in November, it is unlikely that there would be immediate action to tackle Social Security reform. It will require strong leadership from the new president and bipartisan cooperation in Congress to hammer out a compromise to protect future benefits.

But despite the political reality favoring delay, the American public is tired of waiting. A recent survey conducted by the National Institute on Retirement Security found that 87% of respondents say Congress should act now rather than waiting another 10 years to find a solution. This sentiment holds strong across gender, age and party affiliation.

Social Security is funded by a payroll tax of 12.4% on wages, with both employees and employers paying 6.2% of gross wages up to the taxable maximum amount. In 2024, the maximum taxable wage is $168,600. Self-employed individuals pay both portions of the payroll tax for a total rate of 12.4%. Workers who earn more than the maximum taxable amount do not pay Social Security taxes on the excess earnings.

The last major Social Security reform enacted in 1983 established a trust fund to hold surplus revenues from payroll tax receipts. The trust fund continued to grow from inception until 2010 when payroll taxes alone were no longer sufficient to pay all promised benefits. At that point, interest earned on the trust funds was used to supplement payroll taxes and income tax revenue paid on benefit that fund Social Security benefits. 

Starting in 2021, the combination of payroll tax revenues, income taxes on benefits, and trust fund interest was no longer enough to pay full benefits. It became necessary to tap the trust fund principal to help pay all promised benefits. The trust funds will continue to shrink and are expected to be exhausted around 2035 until Congress takes action before then. At that point, ongoing payroll tax revenues would be sufficient to pay only about 80% of promised benefits resulting in a 20% across-the-board benefit cut to all Social Security recipients.

The National Institute on Retirement Security survey found that more than half of Americans—53%–would support an increase in payroll taxes if necessary to ensure long term sustainability of Social Security. 

Among survey respondents who are not yet retired, most understand when they can start receiving Social Security benefits early—as early as age 62—but many were not clear on their own benefit amounts even though that information is readily available on the Social Security website. Only 13% of nonretired respondents knew how much monthly Social Security income they expect to receive once they claim benefits.

But they know Social Security benefits will be crucial to their future retirement security. More than 70% of respondents who are not retired say they need Social Security benefits as the same level as current retires to ensure a secure retirement.

Nearly half of the survey respondents –47%–said they would oppose raising the full retirement age, which is a backdoor benefit cut. The full retirement age currently ranges from 66 to 67, depending on birth year.

There are many things Congress can do to fix the program’s long-term finances including tax increases, benefit cuts or a combination of the two. There have even been proposals to expand Social Security benefits to improve program adequacy, but that would cost even more money.

For example, lifting the taxable earnings cap (currently $168,600) over a 10-year period to about $350,000 so at least 90% of all U.S. earnings are taxable—a recommended standard established in 1983–would close about 19% of the projected financing gap, according to a recent report by Social Security Administration chief actuary Stephen Goss. Eliminating the taxable earning cap completely would close about 57% of the financing gap. 

Raising the full retirement age from 67 to 70 would close just 25% of the gap while boosting the current payroll tax rate from 6.2% of wages to 8.1% for both workers and employers immediately would wipe out the program deficit completely.

In general, Republicans oppose tax increases and Democrats oppose benefit cuts. Just like during the last major Social Security reform in 1983, politicians will have to compromise on a package of reforms that make both parties equally unhappy to protect the long-term security of this crucial retirement program. The sooner they get started, the better.