If you ask me, Social Security has enough problems right now -- and I've just learned of a new one.

The main problem I've been aware of is this: With people living longer than they used to decades ago and many people retiring earlier than they did in the past, the ratio of workers to Social Security beneficiaries has been shrinking over time.

Image source: Getty Images.

A shrinking surplus

Thus, the surplus that Social Security used to have has shrunk, and Social Security is facing a shortfall. If nothing is done to strengthen it, Social Security's trust funds' surplus will run out within a few years, which will result in benefits shrinking to around 78% of the amount due to beneficiaries.

That's a big deal, enough to turn a $2,000 benefit into a $1,560 one.

Fortunately, there are multiple ways to fix Social Security. For example, there's an earnings cap, which is $184,500 for 2026. So someone who earns $33,184,500 pays as much into Social Security as someone who earns $184,500. Social Security's coffers would get plumper if all of everyone's earnings were taxed -- or at least if the cap was raised significantly.

A new wrinkle: Proposed smaller COLAs

Here's the new problem: As you probably know, Social Security benefits increase over time, via nearly annual cost-of-living adjustments (COLAs). The latest increase, for 2026, was 2.8%. The next increase, for 2027, is due to be announced in mid-October. (A recent estimate is that it may be 3.6%.)

The COLAs are already problematic, because they're based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), instead of the Consumer Price Index for the Elderly (CPI-E), which weighs categories such as healthcare more heavily. (As we all know, healthcare spending in retirement can be substantial.) The CPI-W is focused on costs borne by workers more than those borne by retirees.

So the COLAs already don't give many -- or most -- seniors the annual boost they need to fully keep up with inflation. Here's a new proposal, floated by the Committee for a Responsible Federal Budget (CRFB): Having a flat-rate COLA for Social Security.

Here's how they suggest it would work: Instead of coming up with a percentage increase that's applied to each of our benefits, giving everyone the same percentage bump, they recommend coming up with the annual increase percentage, but then applying it to the benefit received by someone at the 20th percentile (someone whose benefits are smaller than 80% of beneficiaries').

So many low-income retirees would receive the same degree of increase that they'd receive with today's system -- or potentially a bigger increase. But 80% of beneficiaries would be getting a smaller increase, the same increase that those with much lower benefits receive.

Why is this being proposed? To help strengthen Social Security. The proposal will effectively pay out less, in total, than it would with the current system. But there are two key ways to shore up Social Security: bring more money into the program's coffers, or pay out less to retirees. This plan chooses the latter.

To me, this is a terrible proposal, financially hurting the elderly. Instead, let's fatten the coffers -- such as by eliminating the earnings cap and by other means.