Every household budget has a repair that gets postponed.
The roof leak that is still only a stain on the ceiling. The transmission noise you learn to drive around. Nothing bad happens for years, and then it does, and the bill is far bigger than it would have been if the problem had been addressed earlier.
Washington runs on the same logic, except the ceiling belongs to about 71 million people.
Social Security has been on a published countdown since long before most of today’s retirees ever filed a claim. The retirement trust fund is now scheduled to run short in 2032, and the automatic benefit cut that follows would hit everyone at once, regardless of age, income, or how carefully anyone planned.
Lawmakers have known about the gap for decades. They have also had workable fixes in front of them for just as long, including one that almost nobody remembers, which came from a Minnesota congressman most readers have never heard of.
He introduced it in 1987. New modeling released this week says it would have done most of the job.
What the 1987 flat-rate COLA proposal actually did
Every January, benefits rise by a percentage tied to inflation. A retiree collecting $1,200 a month gets that percentage. So does a retiree collecting $3,500 a month, which works out to a far larger raise in dollars.
Compounded across 30 years of retirement, the distance between those two checks widens on autopilot.
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A bill from Representative Tim Penny (D-Minn.) flipped the math. His flat-rate cost-of-living adjustment “would pay all beneficiaries the same COLA,” according to the Committee for a Responsible Federal Budget, set at the dollar amount collected by the beneficiary at the 20th percentile.
Same raise for everyone, measured in dollars instead of percentages. Bigger increase for the retiree at the bottom, slower growth for the retiree at the top.
The bill was introduced in the 100th Congress and never became law, according to Congress.gov records.
Penny was a six-term congressman who chaired the Democratic Budget Group and the Porkbusters Coalition, according to the budget group’s biography of him. He now co-chairs that same organization, which is how a 39-year-old bill ended up back in circulation.
It surfaced again on July 21, when the budget group published fresh estimates from Karen Smith of the Urban Institute. Starting the same policy in 2027 would close half of Social Security’s 75-year shortfall, her modeling found. Set at the 30th percentile instead, it closes about two-fifths.
Lawmakers skipped a flat-rate COLA in 1987, and new estimates show the cost.
Why the Social Security math got worse while Congress waited
The delay is the whole story here, and it is measurable. Score the identical policy at two different start dates, and you get two very different repair jobs.
- Flat-rate COLA at the 20th percentile starting in 1988, roughly 75% of the 75-year gap closed, based on Urban Institute DYNASIM4 projections.
- The same policy starting in 2027, about 50% of the gap closed, according to the Urban Institute
- A COLA cap set at the median, about 25% closed, the Committee for a Responsible Federal Budget indicated.
- Switching the index to a chained Consumer Price Index, about 15% closed, based on scores from Social Security’s Office of the Chief Actuary.
- Switching to CPI-E, the version built for older consumers, widens the gap by about 10%, based on the same actuary scores.
I lined up those first two rows because the comparison is the cleanest measure of procrastination I have seen in this debate. The identical policy lost roughly a third of its repair power between the Reagan administration and now.
Meanwhile, the hole kept growing. The 2026 Trustees Report, which moved the depletion date forward again, puts Social Security’s long-term deficit at 4.42% of taxable payroll, up from 3.82% a year earlier.
The retirement fund’s reserves are projected to run out in the fourth quarter of 2032, after which “less than full scheduled benefits would be payable,” according to the Social Security Administration.
Translated out of actuarial language by the Bipartisan Policy Center, “Current and future beneficiaries alike will see their benefits cut by 22%.”
What a flat-rate COLA would mean for your monthly check
Start with what the 2032 cut looks like in a checking account.
The average retired worker collects $2,071 a month after this year’s 2.8% adjustment, the SSA’s 2026 cost-of-living fact sheet confirms. My arithmetic on that figure puts a 22% cut at roughly $456 a month, or about $5,470 a year, arriving with no phase-in and no warning letter.
A flat-rate COLA changes who absorbs the slowdown. At the 20th percentile setting, the bottom fifth of lifetime earners would see benefits fall 3% by 2065, while the top fifth gives up 19%, the Urban Institute estimated.
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Set the flat rate one notch higher, at the 30th percentile, and the bottom fifth gets a 1% raise while the top fifth drops 17%.
What struck me most in that distribution table was the payable-benefit line. Measured against what the trust fund can actually pay after 2032 rather than what the law promises, the lowest-income quintile ends up 13% to 14% better off under either version.
Old-age poverty falls, too, by an estimated 5% under the 20th percentile design and 10% under the 30th.
The formula matters more than it sounds. Percentage adjustments hold the gap between a small check and a large one steady in relative terms, then widen it in dollar terms every single year.
Across a 25-year retirement, that compounding quietly decides how much of the program’s spending reaches people who need it, and how much reaches people who would be fine without it.
What Congress can still do before the 2032 deadline
A flat-rate COLA is not a stand-alone rescue. On its own, it buys about two years before the combined trust funds run dry.
Paired with an employer compensation tax that applies the employer half of the payroll tax to all wages and fringe benefits, the combined funds stay solvent for 75 years and beyond under the Urban Institute’s 2025 baseline. Under this year’s darker projections, that package gets most of the way there.
Had the 1987 version passed, insolvency would have moved out to 2071 by the budget group’s rough estimate, with three-quarters of the gap through 2100 covered and room left for gradual changes to the taxable maximum or the retirement age.
That option is gone. The 2027 adjustment is already being estimated in the 3.8% range, which means another year of percentage raises compounding the spread between the largest and smallest checks.
Penny got his vindication 39 years late, which is worth nothing to anyone currently cashing a benefit check.
The pattern is the useful part. Every option still on the table gets weaker the longer it sits there. The 2032 date is six years out, and whatever version of this fix survives to 2032 will be smaller and harsher than the one on offer now.
Related: Analyst drastically lowers Social Security COLA Estimate