As of June, the Social Security Administration was divvying out a traditional benefits check to nearly 62.5 million people each month. These folks are primarily retired workers, albeit the program also covers a fair amount of long-term disabled workers and the survivors of deceased beneficiaries.

For a majority of these folks, Social Security is indispensable. Over 60% of aged beneficiaries count on the program to provide them with at least half of their monthly income. Among this group, a third are reliant on Social Security for virtually all of their income (90% to 100%). It's for these reasons that I often refer to Social Security as "America's most important social program."

But whether you realize it or not, this vital social program is heading toward disaster.

A golden key lying atop two Social Security cards.

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Here's why seniors should be concerned

In early June, the newest annual report from the Social Security Board of Trustees painted a pretty grim picture of the program's future. Beginning this year, and continuing in each subsequent year, its expenditures are expected to outpace revenue. Though this net cash outflow will begin small, with $1.7 billion and $0.2 billion expected to be removed from its asset reserves in 2018 and 2019, respectively, this outflow will surge to $169 billion by 2027.

The fact is that the program can't continue running a deficit forever -- even with $2.9 trillion in asset reserves. By 2034, it's been forecast that the program's $2.9 trillion in excess cash will be completely drained.

Should this cash disappear, Social Security will motor on. Thankfully, the 12.4% payroll tax on earned income and the taxation of benefits will ensure that money continues to flow into the program to be disbursed to eligible beneficiaries. But it clearly demonstrates the unsustainability of the current payout schedule. At the pace we're on, an across-the-board cut to benefits of 21% may be needed in 2034 to sustain payouts through the year 2092, without any further cuts.

Keeping in mind the statistics of aged-beneficiary reliance, you can see why Social Security's issues are so worrisome.

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What is means-testing?

Clearly, Social Security needs help from lawmakers on Capitol Hill to right the ship. The question is: What solution should be implemented?

Of the more than one dozen fixes that have been considered in the past, the idea of means-testing eligible beneficiaries is one possible solution. In its simplest form, means-testing would look at the annual income of Social Security beneficiaries and determine, based on that income, whether they'd receive a reduced benefit check, or no benefit check at all.

As a fictitious example, lawmakers could choose to implement partial reductions at say $80,000 in adjusted gross income (AGI) and cut benefits completely at $120,000 in AGI. That would mean anyone currently receiving benefits, who earned less than $80,000 in AGI in the previous year, would receive their full Social Security monthly benefit in the current year. However, if someone earned between $80,000 and $119,999 in AGI, their monthly benefit would be partially reduced. Should they make $120,000 or more in AGI, they'd forfeit their benefit entirely.

The idea of means-testing is to ensure that Social Security benefits are going to people who really need them, which is how the program was designed in the mid-1930s. By cutting back benefits to higher-income individuals, it could save the program money over the long run, pushing back its asset reserve depletion date.

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Why hasn't means-testing been implemented for Social Security?

Interestingly enough, it's Republicans, not Democrats, who've been behind some of the more prominent calls for means-testing the wealthy.

During presidential campaigning in 2015, then-presidential candidate Chris Christie offered a proposal that would, among other things, reduce benefits once AGI hit $80,000, and eliminate them completely for individuals making more than $200,000 per year. 

Also before the November 2016 presidential election, Donald Trump suggested, in a roundabout way, that he (and implying the rich people like him) should forgo Social Security benefits in order to help sustain the program. Though Trump has taken a hands-off approach to the program since taking office, it's an idea he's nonetheless previously put on the table. 

So, why hasn't means-testing been implemented as a way to save Social Security money? It appears to a combination of factors.

For one, it doesn't appear that means-testing alone would erase the projected $13.2 trillion cash shortfall the program is facing over the next 75 years. Make no mistake about it, means-testing would put Social Security on a better path forward than it's on now. But it's not a cure-all for the program, and my suspicion is lawmakers are looking for a one-and-done solution.

Secondly, it could be argued that means-testing isn't fair and punishes folks who are successful. Even though we're talking about individuals who are unlikely to be reliant on their Social Security income, they nonetheless paid into the system throughout their working career just like everyone else, and should therefore be due a payout.

And finally, passing an amendment for means-testing would require bipartisan support, which is few and far between on Capitol Hill. With 60 votes needed in the Senate to pass a Social Security amendment, it's unlikely this would happen anytime soon.

Though it's an intriguing proposal that could buy Social Security some added time without the need for a benefits cut, means-testing isn't considered a go-to solution by Washington at the moment.

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