The AARP Public Policy Institute released research examining Social Security’s financing challenges, attributing part of the program’s vulnerability to structural changes in the U.S. economy rather than aging alone. The analysis shows that if taxable payroll had maintained its 1983 share of GDP at 41%, the program could extend solvency by 25 additional years beyond the projected 2034 depletion date for its combined trust funds.
The Social Security Administration’s trustees projected in June that combined retirement and disability trust funds would be depleted in the third quarter of 2034, at which point 83% of scheduled benefits would remain payable. The retirement trust fund alone faces an earlier depletion date of the fourth quarter of 2032. AARP based its analysis on the later date, noting that Congress has historically shifted resources between the two funds.
Taxable payroll has declined from 41% of GDP in 1983 to 34% as of 2025, according to AARP’s research. The shift stems from multiple economic changes, including rising income inequality that has reduced the share of total earnings subject to payroll taxes, a transition from wage-based to investment and business income, increased automation, and the growth of pass-through business entities that allow owners to report compensation as profits rather than wages. Meanwhile, the worker-to-beneficiary ratio is projected to fall from 3.4 to 2.4 between 2000 and 2030, driven partly by falling fertility rates.
To address the funding gap, policymakers could consider several revenue-enhancing approaches. Raising or eliminating the payroll tax cap—currently set at $184,500 in 2026—would affect only about 6% of workers. Eliminating the cap entirely would close approximately 67% of Social Security’s 75-year financing gap if no benefit increases accompany the higher contributions. Alternatively, lawmakers could implement new taxes on business and investment income flowing through pass-through entities, which AARP analysis suggests could address roughly 25% of the gap. The Social Security trustees estimated that increasing the combined payroll tax rate from 12.4% to 16.65% would achieve 75-year solvency.
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