CRFB Says Flat-Rate COLA Could Halve Social Security's 75-Year Shortfall
Updated
Updated · Fox Business · Jul 24
CRFB Says Flat-Rate COLA Could Halve Social Security's 75-Year Shortfall
3 articles · Updated · Fox Business · Jul 24
Summary
A flat-rate Social Security COLA set at the 20th percentile would close 50% of the program’s 75-year funding gap, while a 30th-percentile version would close about 40%, according to CRFB analysis.
The approach would give all beneficiaries the same annual dollar increase, effectively capping COLA growth for higher-benefit retirees while protecting lower-income recipients with a floor tied to lower benefit levels.
By 2065, a 20th-percentile flat-rate COLA would trim benefits 3% for the bottom fifth of lifetime earners versus 19% for the top fifth; the 30th-percentile option would raise the bottom quintile’s benefits 1% and cut the top fifth 17%.
CRFB said the 20th-percentile plan would delay trust-fund insolvency by two years, but Social Security’s main funds are still projected to run short in 2032, triggering an automatic 22% benefit cut under current law.
The group argued the findings show the cost of delay: had Congress adopted a similar proposal in 1987, it estimates the system would have remained solvent through 2071.