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Donald Trump wants to cut taxes on Social Security benefits, affecting current and future beneficiaries.
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Experts in fiscal policy warn the cuts could deplete the Social Security fund earlier than expected.
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Low-income baby boomers and younger generations would be most hurt by Trump’s proposal.
Donald Trump plans to make changes to America’s Social Security system with his return to the White House in January.
The president-elect promised on the campaign trail to cut taxes on Social Security benefits in his second term.
“People on Social Security are being killed, and one of the things I’m doing is no tax for seniors on Social Security, and I’ll get it done quickly,” Trump told “Fox & Friends” in August.
For some baby boomers, lower Social Security taxes could mean larger monthly checks in the short term. But experts in fiscal policy predict that the Social Security tax cuts, along with other campaign promises made by Trump, could quickly drain the national Social Security fund. That would put benefits at risk for low-income retirees and younger generations, who may rely on that income as they age.
“It’s designed to help retirees, but the people it’s going to hurt are people that rely on Social Security the most,” Taylor Lee, a certified financial planner at Belmont Capital Advisors, told BI of Trump’s proposed Social Security tax cut.
More than 72 million Americans receive Social Security, and the estimated average monthly check in October was $1,924.35, according to the Social Security Administration. Americans can begin taking Social Security at age 62 or wait until their full benefits kick in at 67, the national retirement age.
Trump’s campaign promise came as Business Insider heard from older adults with limited retirement savings, many of whom were struggling to afford necessities such as housing and groceries on their fixed Social Security income. Income taxes on Social Security apply to all beneficiaries with an annual household income above $25,000, and most pay taxes on at least 50% of their benefits. Lower-income beneficiaries pay less in taxes.
US Social Security is set to be depleted in the next decade without congressional action. The fund is largely financed through payroll taxes that Americans contribute to throughout their careers.
A report published in October by the nonpartisan Committee for a Responsible Federal Budget said Trump’s campaign promises — which also include ending taxes on tips, reducing some income taxes, expanding deportations, and imposing tariffs — would take a toll on the Social Security fund, making it “insolvent” within the next six years. That’s three years earlier than the Congressional Budget Office’s current estimation.
