Trump's Social Security plan will help baby boomers in the short term and cut benefits for anyone younger
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Donald Trump wants to cut taxes on Social Security benefits, affecting current and future beneficiaries.
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Fiscal policy experts warn that the cuts could deplete the Social Security fund sooner than expected.
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Low-income children and younger generations will be hurt the most by Trump's proposal.
Donald Trump plans to make changes to America's Social Security system upon his return to the White House in January.
The president-elect has campaigned on a tax cut for Social Security benefits in his second term.
“People on Social Security are being killed, and one of the things I'm doing is not a tax on seniors on Social Security, and I'm going to do it immediately,” Trump told Fox & Friends in August.
For some baby boomers, lower Social Security taxes can mean bigger monthly checks in the short term. But fiscal policy experts predict that 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 money as they get older.
“It's meant to help retirees, but the people it's going to hurt are the people who rely heavily on Social Security,” Taylor Lee, a certified financial planner at Belmont Capital Advisors, told BI about Trump's proposed tax cuts.
More than 72 million Americans receive Social Security, and the average monthly check in October was $1,924.35, according to the Social Security Administration. Americans can start taking Social Security at age 62 or wait until their full benefits kick in at age 67, the national retirement age.
Trump's campaign promise comes as Business Insider hears from older adults who are grateful for less in retirement, many of whom are struggling to pay for things like housing and groceries with their Social Security benefits. Income taxes on Social Security apply to all beneficiaries with annual incomes above $25,000, and most pay taxes on at least 50% of their earnings. Low income beneficiaries pay less tax.
US Social Security will be phased out in the next decade without congressional action. This fund is funded largely through the payroll taxes 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 — including eliminating the tax on tips, reducing the income tax, increasing layoffs, and tax cuts — would affect the Social Security fund, “out of money” over the next six years. That's three years earlier than the Congressional Budget Office's current estimate.
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