A bombshell proposal from the Congressional Budget Office (CBO) could dramatically reshape retirement as we know it — and not for the better. If adopted, this plan might slash Social Security benefits by up to 75% for millions of Americans, replacing today’s earnings-based system with a flat monthly payment. While a small group of low-income retirees could gain, the vast majority — roughly three-quarters of all beneficiaries — would see their retirement income take a serious hit.
What’s Being Proposed?
The heart of the CBO’s proposal is simple but controversial: eliminate the current Social Security formula based on your lifetime earnings, and instead give everyone a flat monthly benefit. Under the new system, individuals would receive $1,660 per month, while couples would get $2,250, regardless of how much they paid into the system over the years.
This means someone who earned modest wages during their career would see a boost. But middle- and high-income earners — who’ve contributed significantly more to Social Security — would be hit with reductions that could amount to thousands of dollars each year.
Why Now?
The motivation behind this drastic idea lies in the financial future of Social Security. The program’s trust fund is on a fast track to depletion, currently forecasted to run dry between 2033 and 2035. When that happens, unless Congress steps in, Social Security would only be able to pay about 75% of promised benefits.
The CBO sees this flat-benefit model as a way to simplify the system, create predictability, and — most importantly — cut costs. But the savings from this proposal would only total around $607 billion over 10 years. That’s a drop in the bucket compared to the $22.6 trillion needed to fully fund the program over the same period.
Who Gains, Who Loses?
The winners in this scenario are clear: lower-income retirees who currently receive less than $1,660 a month would see their payments go up. But about 75% of current and future retirees would receive less under this system. That includes millions of Americans who planned their retirement around expected Social Security payouts based on decades of contributions.
Imagine working 40+ years, earning a good salary, and contributing diligently to Social Security — only to find out your benefit is no larger than someone who earned half as much. That’s the reality this proposal could create.
Other Options on the Table
The flat benefit isn’t the only proposal floating around Washington:
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Raising the Full Retirement Age: One option is to gradually increase the full retirement age from 67 to 69. While this may sound reasonable, it could delay benefits for millions, costing some retirees thousands per year.
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Changing the Cost-of-Living Adjustment (COLA): Adjusting the way Social Security keeps up with inflation could cut hundreds of billions in spending — but it also risks shrinking seniors’ purchasing power over time.
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Raising Payroll Taxes: Some policymakers suggest lifting the income cap subject to Social Security taxes. In 2025, earnings above $176,100 are not taxed for Social Security, meaning the wealthy pay a smaller share proportionally.
What This Means for You
This proposal is still just that — a proposal. But it’s a clear signal that change is coming. If you’re currently retired or planning for retirement, now is the time to pay attention. Future benefits may not look like what’s currently promised, and retirement planning strategies may need to change.
Social Security reform will be one of the defining political battles of the next decade. Whether you’re 25 or 75, the decisions made in Washington will directly affect your financial future. Stay informed, stay engaged, and make sure your voice is heard.
