More than 67 million Americans rely on Social Security benefits, making it a cornerstone of retirement security in the United States. Without this program, millions of elderly Americans would face poverty, especially those in lower-income brackets, women, and people of color.
Despite its importance, Social Security is on track to face financial instability, and former President Donald Trump’s current policy proposals could accelerate the program’s insolvency within just a few years.
Social Security’s Financial Challenges
Social Security primarily funds its benefits through payroll taxes. In 1983, a bipartisan agreement set up a surplus fund to prepare for the retirement of the baby boomer generation.
However, in 2021, the program began running a deficit, and the Congressional Budget Office (CBO) projects that without reforms, the Social Security trust fund will be depleted by 2035. Once the fund is exhausted, benefits would automatically reduce by more than 20% — an average of about $400 per month per beneficiary.
Vice President Kamala Harris and Senator Bernie Sanders have proposed solutions to extend Social Security’s solvency by increasing taxes on high-income earners.
Harris supports a tax increase for those earning over $400,000, while Sanders’ Social Security Expansion Act goes even further, targeting income over $250,000, including business and investment income. These adjustments could secure Social Security for decades, with added benefits for retirees, while affecting only the top 7% of earners.
How Trump’s Policies Could Accelerate Insolvency
Trump’s campaign proposals, however, could significantly shorten the program’s solvency timeline. According to an analysis from the Committee for a Responsible Federal Budget, Trump’s suggested changes would drain the Social Security trust fund by 2031, four years earlier than currently projected, and just six years after he would take office if re-elected.
This accelerated timeline stems from a combination of revenue-reducing policies Trump supports.
Key elements of Trump’s agenda include mass deportations, large tariffs, and eliminating taxes on tips, overtime pay, and Social Security benefits. While these proposals have political appeal, collectively, they would negatively impact Social Security’s funding:
- Ending Taxes on Benefits and Tips: Eliminating taxes on tips, overtime, and Social Security benefits would reduce the program’s revenue.
- Mass Deportations: Deporting large numbers of immigrants, many of whom contribute to payroll taxes, would further reduce Social Security’s funding.
- Imposing Large Tariffs: Significant tariffs would likely increase inflation, leading to higher Social Security cost-of-living adjustments (COLAs), which would increase payouts without a corresponding revenue increase.
Consequences for American Retirees
If Trump’s policies are implemented, they would leave Social Security in a financially precarious state, with benefits potentially shrinking by one-third as soon as 2035. This would impact millions of retirees who rely heavily on Social Security for their livelihood.
The proposed policies risk exacerbating economic inequality, leaving some of America’s most vulnerable citizens without adequate financial support in their later years.
The choices made in the coming election cycle will likely determine Social Security’s future, as the program faces structural challenges that require careful policy considerations.
