For most retirees, Social Security is more than just a government benefit—it’s their lifeline. According to Gallup polls, nearly 9 out of 10 retirees rely on Social Security as a significant source of income. Without it, many seniors would struggle to make ends meet.
But Social Security, a program that has been supporting Americans for almost 90 years, is facing a serious challenge. To keep it running smoothly, lawmakers, including President-elect Donald Trump, need to take action.
Trouble Ahead: Big Cuts May Be Coming
Each year, Social Security Trustees release a report that predicts the program’s financial health. The 2024 report showed a worrying $23.2 trillion funding shortfall by 2098, which is $800 billion worse than last year’s estimate.
The main funding for Social Security comes from payroll taxes paid by workers. As long as people work and pay taxes, the program won’t disappear. But, if the funding gap continues, benefits could be cut.
By 2033, the program’s reserve funds are expected to run out. Without these reserves, retired workers may face benefit cuts of up to 21%.
Trump’s Plan: Good Intentions, But Risky Outcomes
Donald Trump has largely avoided big changes to Social Security, but his recent proposal has gained attention. He wants to eliminate taxes on Social Security benefits, letting seniors keep more of their money.
This idea sounds great to retirees, who have seen the value of Social Security benefits shrink due to inflation. However, the tax on Social Security benefits is an important source of funding for the program. Removing it would weaken Social Security even more.
Since its introduction in 1983, taxing benefits has helped bring in money to keep Social Security afloat. Over the next decade, this tax is expected to generate nearly $944 billion. Removing it would make the funding shortfall even worse.
Other Trump Proposals That Could Harm Social Security
A nonpartisan group, the Committee for a Responsible Federal Budget (CRFB), analyzed Trump’s campaign promises. They found that several of his proposals might unintentionally harm Social Security:
- Ending Taxes on Tips and Overtime Pay
Trump wants to remove payroll taxes on tips and overtime, but this would cost Social Security about $900 billion over 10 years. - Imposing Import Tariffs
Trump’s plan to add tariffs on imported goods could lead to higher inflation. While tariffs may help local businesses, inflation raises Social Security benefits (via cost-of-living adjustments), further draining its reserves. - Tightening Immigration Policies
Stricter immigration policies and deporting undocumented workers could reduce the number of workers paying payroll taxes, cutting Social Security’s income.
According to CRFB, these combined proposals could increase Social Security’s deficit by $2.25 trillion over the next decade.
The Bigger Picture
Trump’s proposals aim to improve seniors’ financial lives, but experts warn they may cause more harm than good. With Social Security already facing a long-term shortfall, cutting one of its main income sources could worsen the program’s financial crisis.
While the intentions behind these plans are positive, they highlight the challenges of making changes to Social Security without creating new problems. Lawmakers need to carefully balance what’s good for retirees today with what’s sustainable for the future.
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