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Trump wants to cut taxes on Social Security benefits, affecting current and future beneficiaries.
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Experts warn the cuts could deplete Social Security funding three years earlier than expected.
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Low-income baby boomers and younger generations will be hurt the most by Trump’s proposal.
Donald Trump plans to make changes to America’s Social Security system when he returns 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 going to do is there’s no tax on seniors on Social Security, and I’m going to get it done quickly,” Trump told “Fox & Friends” in August.
For some baby boomers, lower Social Security taxes could mean bigger monthly checks in the short term. But experts predict that the Social Security tax cuts, along with other campaign promises made by Trump, could quickly drain the nation’s Social Security funds. This will put at risk low-income retirees and the younger generation, who may rely on that income as they age.
“It’s designed to help retirees, but the people who will be hurt are the people who rely on Social Security the most,” Taylor Lee, a certified financial planner at Belmont Capital Advisors, told BI about Trump’s Social Security tax cuts.
More than 72 million Americans receive Social Security and receive an average monthly check of $1,907 per month, according to the Social Security Administration. Americans can start taking Social Security at age 62, or wait until they receive full benefits at 67, the national retirement age.
Trump’s campaign promise comes as Business Insider has heard from seniors with limited retirement savings, many struggling to meet necessities like housing and groceries on a steady Social Security income. The income tax for Social Security applies to all beneficiaries with an annual household income of more than $25,000, and most pay at least 50% of their benefits in taxes. Low-income recipients pay lower taxes.
US Social Security will run out in the next decade without Congressional action. The fund is largely funded through payroll taxes paid by Americans during their careers.
A report published in October by the nonpartisan Committee for a Responsible Federal Budget said Trump’s campaign promises — which also included ending taxes on tips, cutting some income taxes, expanding deportations, and imposing tariffs — would damage Social Security funding. making it “bankrupt” in the next six years. That’s three years earlier than the current Congressional Budget Office estimate.
