What the Murphy proposal would do

Representative Greg Murphy, a Republican from North Carolina, introduced legislation in 2023 that would raise the full retirement age for Social Security from 67 to 69 over a 13-year period. The proposal would also means-test benefits for higher-income retirees — meaning people above a certain income threshold would receive smaller payments — and increase the payroll tax cap, the maximum income subject to Social Security tax. The plan does not change benefits for current retirees or people within 10 years of retirement age.

Murphy framed the proposal as a way to address the Social Security Trust Fund's projected shortfall. The trust fund is expected to run out of reserves around 2033 to 2035, depending on economic conditions. At that point, incoming payroll taxes would cover only about 80 percent of scheduled benefits unless Congress changes the program. Murphy's bill is one of several proposals from different lawmakers, each taking different approaches to the same solvency problem.

Key Takeaways

  • The Murphy proposal would gradually raise the full retirement age to 69, meaning people born in 1960 or later would work longer before receiving full benefits.
  • Higher-income retirees would see reduced benefits under means-testing, while lower-income beneficiaries would not be affected.
  • The payroll tax cap would increase, meaning higher earners would pay Social Security tax on more of their income.
  • Current retirees and people within 10 years of retirement would see no change to their benefits under this proposal.
  • The proposal addresses the projected 2033–2035 trust fund depletion but is one of many competing plans in Congress.

How the retirement age would change

Under the Murphy proposal, the full retirement age would increase by two months per year until it reaches 69. The change would begin for people born in 1960, who would see their full retirement age move from 67 to 67 and 2 months. Each subsequent birth year would add two more months, so someone born in 1970 would have a full retirement age of 69.

This is different from the current law, which already scheduled an increase from 66 to 67 for people born between 1943 and 1960. The Murphy proposal would extend that trajectory further. People could still claim benefits at 62, but the reduction for early claiming would be steeper — claiming at 62 would mean a larger permanent cut to monthly payments than it does today.

What means-testing would mean for higher earners

The proposal introduces means-testing, a mechanism that reduces or eliminates benefits based on income or assets. Under Murphy's plan, retirees with income above a certain threshold would receive smaller monthly payments. The exact income threshold is not specified in the proposal text, but similar means-testing proposals in Congress have used thresholds ranging from $55,000 to $85,000 in annual income.

Means-testing would affect only higher-income retirees. People with lower incomes would continue to receive their full calculated benefit. This differs from the current Social Security system, which pays the same benefit formula to everyone regardless of income or wealth. Means-testing is controversial: supporters say it targets resources to those who need them most, while critics argue it turns Social Security from a universal insurance program into a welfare program.

Changes to the payroll tax cap

Social Security is funded by a payroll tax of 12.4 percent (split between employer and employee). Currently, this tax applies only to income up to a cap, which was $168,600 in 2024. Income above that cap is not subject to Social Security tax. The Murphy proposal would increase this cap, meaning higher earners would pay Social Security tax on more of their income.

The proposal does not specify a new cap amount, but raising the cap is a common element in Social Security reform plans. Some proposals would eliminate the cap entirely, while others would raise it gradually or explore it to investment income as well as wages. Increasing the cap would generate more revenue for the trust fund but would also increase the tax burden on higher earners.

Who would not be affected

Current Social Security beneficiaries would see no change to their benefits under the Murphy proposal. People already receiving payments would continue to get the same amount, adjusted annually for cost-of-living increases. Additionally, anyone within 10 years of their full retirement age at the time the law passed would be grandfathered in — meaning they would not experience the higher retirement age.

This protection is designed to give people close to retirement time to adjust their plans. Someone who is 57 years old when the law passes would reach full retirement age before the changes take effect. The changes would explore only to younger workers who have time to plan for a later retirement age.

How this compares to other reform proposals

Congress has considered multiple approaches to Social Security solvency. Some proposals, like those from Senator Elizabeth Warren, would raise or eliminate the payroll tax cap without changing the retirement age or means-testing. Others would increase payroll taxes across the board. Still others would reduce benefits for all future retirees or make larger changes to program structure.

The Murphy proposal combines three changes — raising the retirement age, means-testing, and increasing the tax cap — in a single package. This combination approach is meant to spread the burden across different groups: younger workers (through the higher retirement age), higher earners (through the tax cap increase and means-testing), and higher-income retirees (through means-testing). No proposal has passed Congress, and the debate over which approach is fairest continues.

What happens to the trust fund under this proposal

According to Murphy's office, the combination of these three changes would extend the trust fund's solvency beyond the current 2033–2035 projection. However, the exact timeline depends on economic assumptions — wage growth, inflation, life expectancy, and birth rates all affect how long the fund lasts. Different analysts using different assumptions may reach different conclusions about how long the proposal would extend solvency.

Even if the proposal passed, it would not permanently solve the solvency problem. Demographic trends — particularly the aging of the Baby Boom generation and lower birth rates — mean that the ratio of workers to beneficiaries will continue to decline. Any reform package would likely need to be revisited in future decades as conditions change.

Frequently Asked Questions

Would I have to work until 69 if this proposal became law?

Only if you were born in 1960 or later. You could still claim benefits at 62, but your monthly payment would be permanently reduced by a larger amount than it is under current law. The exact reduction depends on how many years before your full retirement age you claim.

What income counts toward the means-testing threshold?

The proposal does not specify which types of income would count. Similar proposals in Congress have included wages, self-employment income, pensions, and investment income. You would need to see the final bill text to know exactly what counts, and the threshold amount itself is not set in Murphy's proposal.

Would this change affect people already retired?

No. Current beneficiaries would see no change. The proposal also protects anyone within 10 years of their full retirement age when the law passes, so the changes would affect only younger workers.

How much would higher earners pay in additional payroll tax?

The proposal does not specify a new tax cap amount, so the exact increase cannot be calculated. Raising the cap from $168,600 to $250,000, for example, would mean higher earners pay tax on an additional $81,400 in income. The actual impact depends on where Congress sets the new cap.

Is this proposal likely to become law?

Social Security reform requires bipartisan agreement in Congress, and no single proposal has gained enough support to pass. The Murphy proposal represents one approach among many, and the debate over which changes are fairest and most effective continues.