Modifying the Social Security Blueprint in response to a deteriorating outlook

Introduction

In February 2025, Wendell Primus, Tara Watson, and Jack A. Smalligan published a Blueprint for restoring Social Security solvency to avoid the 24% cut in benefits that could occur when Social Security is expected to deplete its trust funds in 2032. Since the Blueprint was published, the size of the problem—the difference between projected incomes and costs, known as the actuarial balance—has grown bigger, largely because of legislation passed by Congress. This policy brief shows that by adjusting a few policies in the original Blueprint, solvency over 75 years can be restored even with assumptions more pessimistic than the Social Security actuary’s intermediate projection. Ultimately, Congress needs to make policy changes to stabilize Social Security’s finances. The Blueprint was crafted to demonstrate that there is a way to fix Social Security that could be acceptable to both Democrats and Republicans, but is not, of course, the only set of policies that can achieve that goal.

Deteriorating actuarial projections

The 2024 Social Security Trustees Report estimated the 75-year actuarial deficit of the Old-Age, Survivors, and Disability Insurance (OASDI) program to be 3.5% of taxable payroll. With the passage of the Social Security Fairness Act in early 2025, the actuarial deficit increased by 0.14 percentage points to an imbalance of 3.64% of taxable payroll. The 2025 Trustee’s Report estimates the 75-year OASDI actuarial deficit to be 3.82% of taxable payroll. The Social Security Administration (SSA) estimates that the passage of the One Big Beautiful Bill Act (OBBBA) will further increase the deficit by 0.16 percentage points for a total deficit of 3.98% of taxable payroll.

Alternative assumptions

Any projection that extends 75 years into the future depends upon making different assumptions about many variables: the fertility rate, the immigration rate, the interest rate, GDP growth, and more. The SSA actuaries have modeled the finances of Social Security for many years with great success and accuracy. However, there are two variables that many analysts question: the fertility rate and immigration. (Lower fertility rates and lower levels of immigration make the Social Security actuarial shortfall worse because there are fewer taxpaying workers.) For example, Warshawsky argues that the 2025 Trustee model may underestimate the true actuarial shortfall by assuming that the fertility rate will rebound from its current level of 1.6 births per woman to 1.9, instead of remaining at the lower rate. The Congressional Budget Office (CBO) also assumes the lower fertility rate persists. SSA actuaries assume immigration will be around 2 million people this year, while the evidence suggests that immigration this year could be close to zero or slightly negative.

In addition to SSA’s best estimate of the program’s finances (known as the “intermediate assumption”), the actuaries also report a “high-cost” estimate that assumes lower fertility rates and less immigration. The high-cost fertility and immigration assumptions from SSA better reflect current demographic trends than the intermediate-cost versions, and align SSA’s estimates more closely with CBO’s estimates. The SSA’s high-cost assumptions add 0.67 percentage points of payroll to the deficit with the lower fertility rate and 0.46 percentage points with the lower immigration level.¹ As a result, the original Blueprint falls 1.53 percentage points short of the needed adjustment. Table 1 shows the actuarial deficit after each adjustment to SSA’s estimate compared to CBO’s 2025 estimate. The table also includes the remaining imbalance if the policy changes in the original Blueprint were implemented.

Adjusting the Blueprint to restore solvency

The 16 policy changes in the Blueprint attained solvency when modeled by SSA’s Office of the Chief Actuary using the Trustee’s 2024 assumptions about the economy over the next 75 years. Can this plan be reasonably altered to restore 75-year solvency under much larger actuarial imbalances as shown above in Table 1?

Our answer is: Yes. Several policies in the original Blueprint can be adjusted easily, including the payroll tax rates, the ceiling on wages subject to the payroll tax, and the retirement age.² In the Blueprint, the payroll tax rate was increased from 12.4% to 12.6%. However, there is no reason that the payroll tax rate could not be increased by several more tenths of a percentage point.

The Blueprint increased the age at which individuals can claim benefits without a reduction in their monthly checks by three years for the highest earners—from 67 to 70—between 2037 and 2054. It may be possible to increase the retirement age further than in the Blueprint for high wage earners, as longer life expectancy means an ability to work for more years. (As Table 3 in the Blueprint shows, the difference in life expectancy between those at the bottom and top quintiles of the wage distribution is significant. For men, the difference is 10.3 years, and the difference for women is 6.4 years.)

The Blueprint slowly increased the ceiling on wages subject to the Social Security payroll tax, so it would, by 2039, cover 90% of total wages (as it did historically). Although we do not believe the taxable maximum should be eliminated, increasing the maximum by several percentage points beyond 90% would be substantively and politically feasible, and would improve solvency significantly.

Estimation methodology

A simple estimation technique to approximate the impact of changing a policy is to assume a linear increase. Under this assumption, each additional unit increase in the policy will result in the same change to the actuarial balance calculated by the 2024 SSA modeling. While this may not be precisely correct, it provides a good estimate to show in this issue brief that larger actuarial deficits can be offset.

Additionally, all three policies need to be phased in after the phase-in schedule outlined in the Blueprint. This means these changes would happen later in the 75-year period and, consequently, their impact would be lessened. For this estimation exercise, we assume an arbitrary 15% adjustment to compensate for this later phase-in, reflecting a delay of about 10 to 11 years for the additional policy change to take effect.

The linear estimate for an additional increase in each of the three policies was calculated by taking the SSA’s estimated change in the 75-year actuarial deficit divided by the change in policy under the Blueprint. For example, in 2024, the taxable maximum ceiling covered 82.5% of earnings. The Blueprint called for an increase in the taxable maximum ceiling to cover 90% of earnings. SSA, in 2024, estimated this would result in a 0.66 percentage point improvement to the 75-year actuarial deficit. Assuming a linear effect, an additional one percentage point increase in the ceiling would translate to a 0.088 percentage point improvement to the 75-year actuarial deficit. Adjusting for the later phase-in ultimately results in a 0.075 percentage point improvement. The linear effect of increasing the retirement age for high earners and the payroll tax is estimated using the same process. Table 2 lists the linear effects for each of the three policies as well as the important components used for each calculation.

Policy change results

To close the 1.53 percentage point gap between the Blueprint and the 75-year actuarial balance under 2025 high-cost SSA assumptions, all three policies will need to be increased. As an illustrative example, raising the taxable maximum ceiling to cover 94% of wages and increasing the retirement age for high earners to 73 results in 0.3 percentage points and 0.47 percentage points of improvement, respectively. As such, the payroll tax must then be increased to 13.6% to make up the rest of the gap. Table 3 demonstrates how the illustrative example can restore solvency by adjustments to the three policies and how those changes differ from the original Blueprint.

Alternative examples of policy changes can be created using the same techniques described in Table 3. For instance, an increase in the payroll tax rate to 13.9%, increasing the taxable maximum so it covers 92% of wages, and raising the retirement age for top earners to 72 would reduce the actuarial imbalance by an additional 1.51 percentage points of taxable payroll compared to the Blueprint. Similarly, an increase in the tax rate to 13.4%, a retirement age increase to 73, and covering 93% of wages would reduce the actuarial imbalance by an additional 1.35 percentage points of taxable payroll compared to the Blueprint. While Congress will ultimately make decisions to restore solvency, we have shown that there are many avenues to achieve the goal of deficit reduction.

Conclusion

In summary, the Fixing Social Security Blueprint published earlier this year can be reasonably adjusted to meet larger 75-year actuarial deficits. Of course, policymakers may want to consider alternative approaches.

The benefits of the estimated increases to the taxable maximum ceiling, retirement age for high earners, and the payroll tax outlined in this issue brief are approximations. However, they demonstrate that the Blueprint is a flexible, bipartisan option to restore solvency while decreasing the nation’s budget deficit.