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Social Security COLA proposal would cap inflation adjustments for higher earners
The Social Security Trustees project the retirement trust fund could run out in Q4 2032, leaving 78% of scheduled retirement benefits payable if Congress takes no action.
A bipartisan proposal discussed by the Committee for a Responsible Federal Budget would limit Social Security cost-of-living adjustments for the highest-income earners, aiming to reduce program costs as the trust funds face depletion, Yahoo Finance reported.
According to the Social Security Trustees Report released in June 2026, the retirement trust fund is projected to run out of reserves in the fourth quarter of 2032. After reserves are depleted, incoming revenue would cover about 78% of scheduled retirement benefits, while the combined retirement and disability trust funds are projected to last until 2034, with 83% of scheduled benefits payable after reserves are depleted.
If such a change were enacted, the outlet noted it could make it harder for some beneficiaries to maintain purchasing power later in retirement. That stakes are heightened by an upcoming COLA, with AARP estimating a 3.5% adjustment and the official figure expected in October after September’s inflation data is released.
The article also explains that COLA is designed to protect Social Security beneficiaries from inflation, and the automatic annual adjustments were established after inflation rose in the 1970s, with the COLA linked to the Consumer Price Index.