Americans could see their financial situation shift radically in their golden years depending on the winner of the upcoming presidential election, according to an analysis released by the nonpartisan Committee for a Responsible Federal Budget on Monday.
The vision for Social Security presented in former President Donald Trump’s economic agenda would cause the program to go bankrupt in six years, the analysis said.
Trump’s plan includes imposing sweeping tariffs and lowering the corporate tax rate, along with ending taxes on tips.
Former President and Republican presidential candidate Donald Trump speaks during a town hall at the Convention Center in Lancaster, Pa., Oct. 20, 2024.
Charly Triballeau/AFP via Getty Images
His plan also says he’ll eliminate tax on Social Security wages. Those taxes, which are collected when Americans earn money on Social Security, are a critical revenue stream to fund the program in the future. It may give some seniors relief in the immediate future, but would risk the program’s solvency.
If no other funding source is found, seniors would see a 33% benefit cut in 2035, the analysis said.
By contrast, the committee noted that Vice President Kamala Harris’ plans would not have a large effect on the trust fund’s solvency — it would run out of money in nine years under her agenda.
Vice President and Democratic presidential candidate Kamala Harris speaks during a campaign event at the Resch Expo Center in Green Bay, Wis., Oct. 17, 2024.
Kamil Krzaczynski/AFP via Getty Images
This would see a typical American household lose $16,5000 in annual benefits in 2033, according to the committee.
Significant legislation is required to address this shortfall, but people looking to augment their savings have multiple options. They should be aware of company matching policies on 401K retirement plans or bolster their own saving plans.
Many people also have money sitting in savings accounts, but they aren’t earning significant interest. They can invest in a way that will give them long-term returns, whether it’s a high-yield savings account or a portfolio with stocks and bonds.
Since the Committee for a Responsible Federal Budget’s analysis came out, Harris has turned the danger of insolvency under Trump into a line of attack on the campaign trail. However, it’s under threat regardless — despite both of the candidates saying they want to protect Social Security.
It’s unclear how either of them can address the insolvency issue without raising taxes, but it’s unlikely they will want to bring up that possibility in the final two weeks before the election.