Trump’s Social Security Plans Raise Concerns Over Program’s Long-Term Stability

Social Security
Several Social Security Cards on a US United States one hundred dollar bill $100 system of benefits for retired elderly people

*Social Security is a vital financial lifeline for most retirees, with 88% of respondents in a 2024 Gallup poll stating it is a “major” or “minor” source of income. However, the program’s financial health has declined for decades, creating urgency for elected officials, including President-elect Trump, to address its challenges.

According to The Motley Fool, President-elect Donald Trump proposed two major ideas regarding Social Security during his campaign, neither of which addresses the program’s long-term challenges. 

First Proposal: Do Nothing

Trump suggested leaving Social Security untouched, echoing the status quo approach taken by previous administrations. While politically safe, this strategy fails to address the program’s growing funding shortfall, with the Old-Age and Survivors Insurance (OASI) reserves projected to be depleted within a decade. Trustees Reports consistently highlight that inaction exacerbates the problem.

Second Proposal: Eliminate Social Security Taxes on Benefits

Trump also advocated for removing federal taxes on Social Security benefits, a popular but problematic idea. Since 1984, certain thresholds have allowed up to 85% of benefits to be federally taxed, contributing significantly to Social Security’s funding. These thresholds have not been adjusted for inflation, frustrating retirees. However, eliminating this tax would strip Social Security of nearly $944 billion over a decade, worsening its financial instability and accelerating the timeline for potential benefit cuts.

In short, both proposals risk undermining Social Security’s solvency rather than strengthening it.

Per The Motley Fool: Social Security’s struggles can be traced to some combination of:

  • Baby boomers leaving the labor force in greater numbers, which is weighing down the worker-to-beneficiary ratio.
  • Increased life span (Social Security was never designed to dole out payments to retirees for decades).
  • A historically low birth rate, which will eventually be a drag on the worker-to-beneficiary ratio.
  • A more-than-halving in net legal immigration into the U.S. since 1998 (Social Security relies on a steady inflow of legal immigrants to boost payroll tax collection).
  • Rising income inequality, with a higher percentage of earned income escaping payroll taxation as time has passed.

READ MORE FROM EURWEB.COM: Key Ages for Social Security Benefits: 62 and 67 Explained

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