When This Check Arrives, Dinner’s on You
Attention high-earning lawyers: if anyone’s losing part or all of their Social Security benefit, it’s you.
In June, something strange happened on The New York Times’ opinion page. Bernie Moreno, a Trump-endorsed Republican from Ohio, formerly of the car business, co-wrote a guest essay with Elizabeth Warren, a progressive Massachusetts Democrat. Together, this Stone Cold Steve Austin and Shawn Michaels-level weird tag team proposed lifting the Social Security payroll tax cap so that all wage income, not just the first $184,500, gets taxed at 12.4 percent. They say legislation is coming.
You could read this as a heartwarming story of bipartisanship in an era bereft of it. But I'd advise against that. It’s more like a preview of the dinner bill you will get stuck with to solve Social Security's funding problem. Yes, my high-earning corporate lawyer friend, they even name-checked you in the piece: “Why should a middle-class nurse pay a larger share of her paycheck than a wealthy corporate lawyer?” they ask, before concluding: “[t]his is doubly unfair in an economy in which top earners’ wages, over time, have pulled far ahead of those of the average worker.”
It's worth paying close attention.
The problem is real, and the deadline is near
The 2026 trustees report projects that the main Social Security trust fund will be depleted by late 2032, six years from now, after which the program could pay only about 78 percent of scheduled benefits. Absent congressional action, that's an automatic cut of more than 20 percent for everyone. This is the one outcome no politician of either party will allow to happen to 70 million Americans who receive a check and vote at higher rates than everyone else.
So, Congress will eventually act to fix this, one way or another. The question is: who pays? When cutting benefits for low-income seniors is political suicide and raising payroll taxes on the middle class is radioactive, that leaves a short menu of politically survivable options. They include uncapping the payroll tax, means-testing, and quieter cuts such as progressive price indexing or trimming cost-of-living adjustments.
Uncapping the payroll tax
Uncapping the payroll tax is the Moreno–Warren approach. Today the maximum Social Security tax attributable to one worker is $22,878, or 12.4 percent of $184,500, split with an employer, unless you're self-employed, in which case (hello, equity partners) you pay the whole thing. Uncap it, and a partner with $1 million in self-employment earnings pays roughly $124,000 a year instead—about $100,000 more, with no corresponding increase in benefits. The Peterson Foundation pegs the ten-year revenue at around $3 trillion. Polling suggests roughly two-thirds of both parties support the idea, including a majority of households earning over $200,000. When even the people being taxed poll in favor, the outcome is not much in doubt over the long run.
Means-testing
If Congress instead (or additionally) trims benefits, it will not do so evenly, because a blanket cut is politically infeasible. It will scale back or eliminate benefits for the affluent, tested against income or net worth at retirement. In other words, means-testing the benefits. Policy analysts are already floating versions of this, capping what a couple can collect at, say, $100,000 a year. “The rich don't need it" is about the most unassailable sentence in American politics.
The stealth cuts
Even without formal means-testing, there are sneakier tools that allow Congress to avoid negative press headlines. Naturally, they might find these tools particularly appealing.
One leading option is progressive price indexing. It’s an old idea, pitched in the Wall Street Journal by Fidelity's Robert Pozen back in 2005. It was embraced by President George W. Bush, and later revived in Paul Ryan's budget roadmap. It would keep tying benefit growth to wages for low earners while switching high earners to slower-growing inflation indexing. Doing this would bend the high earner’s benefit curve downward over decades without generating a single headline containing the word "cut." Congress can pull other similar levers: adjusting the bend points in the benefit formula, which already return far fewer cents on the dollar to top contributors, or trimming cost-of-living adjustments for affluent recipients. Each lets Congress say, truthfully, that it never cut anyone's check while yours just stops keeping up.
Moreno and Warren’s bill may go nowhere. It hasn't even been introduced, and Moreno's fellow Ohio Republican Senator, Jon Husted, already denounced it as a giant tax increase. Plus, Social Security's own actuaries aren’t convinced that uncapping the payroll tax alone provides a clean solution. Doing so would close only about half of the long-run gap anyway. That’s all well and good, but none of it saves you. The shortfall that produced this bill won’t go away even if it dies.
If you’re a HENRY, you won’t like this matrix
Sorting households along two axes, income and savings, produces a useful matrix for understanding whom these cuts most and least affect. For some, any handwringing about Social Security is clearly pointless worry. For others, well…they should panic.
Low earners are politically protected; any reform will be built around shielding them. High earners with high savings will lose benefits they weren't relying on; frustrating, but not dangerous. With discipline and effort, any high-earning lawyer can be in this quadrant. And the time to start aiming for it is now, because the catastrophic square belongs to high earners with low savings: the HENRYs, High Earners Not Rich Yet. These folks could be means-tested or indexed out of a significant portion of their benefits because of their income, while lacking the private balance sheet to replace the guaranteed, inflation-adjusted cash flow they lost.
A household earning $550,000 and spending nearly all of it—which is a surprising number of lawyer households—lives in that square. To be sure, Social Security's maximum benefit sounds like a rounding error relative to that income. But as a permanent, inflation-indexed floor for fixed retirement costs, it's exactly the kind of asset that's brutally expensive to replicate privately. It’s also exactly the kind of asset I suspect these households—lacking a firm grip on their finances as it is—vaguely assume will be there. If it’s not, and they’re desperate for a steady source of high income, their sixty-five-year-old selves will be catnip to an unscrupulous annuity salesman.
Benefits intact, since no serious proposal targets modest earners, plus a private cushion on top. Reform all but passes them by.
Means-tested or indexed out of benefits they weren't counting on. The balance sheet absorbs the blow; they barely notice.
The constituency every reform is engineered to shield. Whatever passes Congress, their checks survive it.
The HENRYs: High Earners, Not Rich Yet. Tested out of benefits because of their income, with no private balance sheet to replace the guaranteed, inflation-adjusted floor they lost.
Don’t depend on the kindness of strangers
Warren Buffett, in his 2008 letter to shareholders, remarked that “we never want to count on the kindness of strangers in order to meet tomorrow’s obligations.” When you build Social Security into your financial plan with certitude, you’re effectively doing exactly that. So, if you are a high earner, run your retirement math with Social Security reduced to a fraction—or $0—and see if your plan still works. If it does, great; you may get a windfall someday that, if you feel guilty about it, you can turn around and deploy charitably. If it doesn't, you have just identified a gaping hole in your foundation while there's still time to pour concrete. Consult with your own advisor (once again, I’mnot your advisor), but the “concrete” I recommend is, in short, the same boring material I usually recommend and will keep recommending on Unreasonably Prudent: a high savings rate, tax-advantaged accounts stuffed to their legal limits, topped off with a taxable portfolio that is wholly indifferent to Congress’s Social Security plans. If your advisor is sensible, their recommendations will likely rhyme with mine even if they don’t exactly repeat.
Social Security will survive. The political will to preserve it for the nurse and the teacher is bottomless. As it should be. But someday—hopefully later than sooner—the program won’t look the same. And when Washington finally sits down to settle this particular check, the table will be full of people who won’t be expected to pay: the low earner, the middle-class voter, and the politically active retiree already collecting. You are not on that list. It would be prudent to have already arranged, well in advance, not to need what Congress could absolutely take.