If you’re a Trump fan, you need to know about all the ways he could change Social Security in 2025!
We have no idea who’s going to become the next president of the United States, but we know for sure that they can have a great impact on our finances. Their rules, laws, programs, and projects can change our lives for the better or worse.
We want to take each presidential candidate and see how their election could impact our lives, and in today’s article, we’ll take Donald Trump. Whether the former leader wins and serves his second final term this year or not, the future president will face a ticking time clock when it comes to Social Security in 2025.
According to experts, these benefits are set to be smashed with a funding shortfall that’s been in the making for years and years. Therefore, this could give the next ruler of the country a huge role in the program’s future. So, if you’re curious to see how your financial future could be impacted, here’s how Donald Trump’s election could change Social Security in 2025:
1. He vowed not to touch the program
A couple of months ago, when Nikki Haley announced that she wanted to raise the retirement age for today’s younger workers, Donald Trump quickly said that he wanted to protect the Social Security program. He mentioned on his campaign website that he won’t cut benefits or change how things are in case he’s reelected.
In the 2000s, the politician mentioned that the Social Security system needed an overhaul and a few cutbacks on funding. However, it seems like his thoughts have changed throughout the years because lately, he claimed he’ll do anything to not touch Social Security and leave everything as it is.
…Do you think the next president could increase or decrease your Social Security benefits? Share your thoughts in the comments below!
2. Doing nothing will potentially lead to something
Young workers were relieved to hear that Nikki Haley withdrew from the race, but as political analysts say, not doing anything could also harm the program in the long run. The reason behind this statement is that the SSA anticipates that the trust funds supporting the program will be depleted by 2034. At that point, the payroll taxes alone will have to cover the benefits, which will only be enough to fund 80% of the promised payouts.
Unfortunately, the short-term solutions for preventing this problem are increasing payroll taxes, increasing the retirement age, or even both. But Donald Trump seems confident and believes the solution can be different. During a town hall at the end of 2023, he vowed to increase the US oil production to get more money for Social Security’s shortfall.
…What’s your take: should we keep Social Security as it is, or make tax changes to secure its future? Let us know in the comments below!
3. Payroll taxes
Payroll taxes are those that fund Social Security, and they’re important for the nation’s finances. Employees and employers each contribute 6.2%, while those who are self-employed pay the full 12.4% tax themselves.
As analysts say, raising payroll taxes is a potential solution to delay the looming Social Security shortfall. The former American president keeps saying that something like this won’t happen during his tenure, but if we take a look at his first mandate, he’s more likely to go even further by lowering payroll taxes instead of just refusing to raise them.
A second Trump mandate could trigger multiple dynamics in Social Security, mainly influenced by his previous presidential approach to fiscal social welfare programs and policies. For instance, during his first term, the politician proposed payroll tax cuts as a method to boost economic growth.
…Have you decided who you’re voting for? What influenced your choice? We’d love to hear your thoughts! Politics can shape our lives in ways we may not expect, for better or worse, whether we like it or not.
4. Short-term economic stimulus vs. long-term social security funding
In 2020, the renowned politician issued an executive order to defer the collection of payroll taxes. Media sources say that only a couple of companies acknowledged the deferral, and the order had “little to no effect on economic growth.” However, if the previous proposals are indicative of future policies, permanent payroll tax cuts are being considered if Mr. Trump wins a second term.
Even though measures like this can have a positive impact on the country’s economy in the short term, they could also trigger funding decreases for Social Security, especially if the politicians can’t come up with an alternative funding solution.
As financial experts say, it’s important to think about the bigger context of Mr. Trump’s economic policies, which promoted tax cuts and deregulation, potentially increasing the deficit. Moreover, an increased deficit without a clear plan to support Social Security could put additional strain on the program’s long-term viability.
…How did you feel about Donald Trump’s first term? If he’s re-elected, do you think his next one will be even better?
5. Program impact in 2025
If you were expecting immediate changes, I’m sorry to disappoint you, but it won’t happen. As experts say, it doesn’t matter who wins the election in November; even the next leader’s most significant change to Social Security won’t impact the program until at least 2026.
For instance, when Donald Trump signed his executive order in August 2020 deferring payroll taxes, he said that if he’s elected, he plans to forgive these taxes and make permanent cuts to the payroll tax, as media sources say.
According to the article, Social Security Chief Actuary Stephen Goss issued a warning, stating that by mid-2023, permanent payroll tax cuts could deplete the program’s funds. The issue with Goss’s calculation is that it assumed the cuts would take effect on January 1st, 2021, even though Trump’s second term wouldn’t have started for another 19 days.
What about COLA?
Even if the incoming president signs new tax legislation shortly after taking office on January 20th, 2025, it won’t go into effect until the next tax year. Similarly, the Social Security COLA for 2025 was determined in the third quarter of this year.
Raising the retirement age would be a slower transition, gradually phasing change for today’s young workers. As specialists say, the last big increase was a result of an overhaul in 1983, when the full retirement age was 65, and it didn’t reach 67 for those born in 1960 or later until 2022.
In conclusion, even though a second Donald Trump victory won’t affect the Social Security program, no doubt leaving everything as it is won’t hurt it in the long run.
Did you find this article helpful? Do you think that a Trump second term could benefit us? We’re curious to know what your thoughts are, so leave a comment below. If you’d like to read how Kamala Harris’ election could change Social Security for you, leave a comment below and we’ll take care of it ASAP.
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