At the beginning of 2025, nearly 52 million retired workers brought an average monthly check of $1,975.34 from Social Security. Although this may sound like a certain amount of income, it usually requires helping Americans with aging to make ends meet.
For 23 years, National Poll Gallup has conducted an annual survey to assess the reliance on retirees’ monthly social security checks. No failures, all 23 years show that 80% to 90% of respondents (including 88% in 2024) require them to receive Social Security benefits in some capacity to pay for their expenses.
While maintaining social security health should Becoming a priority for elected officials is the reality that the foundation of America’s leading retirement plans has been weakened for 40 years. Current and future beneficiaries are counting on lawmakers, including Donald Trump, to strengthen the plan.
The problem is that not all proposed changes to social security improve their financial base.
President Trump signs paperwork in the Oval Office. Image source: Official White House photo by the National Archives Shealah Craighead.
Before digging out what President Trump has proposed to do with the work of what America’s leading retirement plans is important to understand the motivation for how we can get to where we are.
Over the past 85 years, the Social Security Commission has released a report detailing every dollar of income the program brings and the ultimate income of those dollars. More importantly, the Trustee Report considers changes to fiscal and monetary policy and countless population changes, examining the future solvency of the Social Security Trust Fund.
Since 1985, the trustees have reported predicting long-term financial obligations. In this sense, “long-term” refers to the 75-year period after the issuance of the trustee’s report. This means that estimated income collected over 75 years, including cost-of-living adjustments (COLAS), cannot fully cover aristocrats such as welfare, and to a lesser extent the administrative expenses for running a social security program.
As of 2024, the social security long-term funding obligation shortage was $232 trillion, $800 billion higher than the previous year’s report.
The bigger concern is that the Older and Survivor Insurance Trust (OASI) is expected to exhaust its asset reserves by 2033. Although OASI has no danger of bankruptcy or bankruptcy, existing payment schedules, including COLAS, are used for retired workers and retired workers and survivor beneficiaries to be at risk beyond 2033.
If OASI’s asset reserves have been fully exhausted, the trustee estimates that OASI will need to maintain its expenditures in 2098 without further reductions, and a 21% cut in benefits.
Social security impairs financial prospects responsibility Absolutely no Myths about traditional interests related to Congress’ theft or undocumented immigration. Instead, it is a function of ongoing demographic shifts, such as the lower birth rate in the U.S. history, in the scope of legal net migration to the U.S. is more than just increasing income inequality.
OASI’s asset reserves are expected to dry by 2033. YCHARTS’s U.S. Seniors and Survivors Insurance Trust Assets.
The unwritten rule of thumb on Capitol Hill is to avoid political, social security third track. Even if most lawmakers recognize that the top social programs in the United States are getting sick, it will almost certainly lead to a group of people worse than before.
But the presidential candidate has no luxury to take any stance on key issues. Although Trump has taken primarily social security momentum, he hints at the big changes he wants to make in late July.
Trump at the time wrote in an article on the president’s social media platform Truth Society Society: “The elderly should not pay taxes on social security.” About a week later, he reiterated this position Fox and friends interview.
Taxes on social security benefits began forty years ago. As the program’s asset reserves nearly ran out in 1983, bipartisan Congress passed, and then-President Ronald Reagan signed the 1983 Social Security Amendment into law. This thorough overhaul gradually increased the payroll tax for workers and full retirement age and proposed taxes on benefits now.
Beginning in 1984, if temporary income (adjusted total income + tax-free interest + half of benefits) provides a single applicant with $25,000 of $25,000, while a joint submission of a couple of $32,000 co-application, Up to 50% of Social Security benefits should be taxed at federal interest rates. In 1993, a second tier was added, if temporary income exceeds $34,000 for a single filer, it is exposed to 85% of federal tax revenue, or $44,000 for couples who filed together.
Taxes on Social Security benefits are so painful – and why the president tried to exploit the removal tax – are because these income thresholds have never been adjusted for inflation. When the initial tax tier was introduced more than 40 years ago, it is expected to affect only about 10% of senior households. But after four decades of high nominal wages and cost of living adjustments, about half of the retired families are subject to the tax.
The tax on ending the welfare tax will receive a huge smile from retirees, but it will also have a series of unexpected consequences.
Image source: Getty Images.
The advantage of eliminating the tax on Social Security benefits is simple: it will allow half of all retired workers beneficiaries to retain more of the benefits they receive. However, such short-sighted action can have serious long-term consequences, which can have a large impact on retirees.
In 2023, Social Security brought in $1.351 trillion in revenue, with 91% coming from a payroll tax (wage and wages, but not exceeding investment income) of 12.4% of income. Even though taxes on benefits “only” generate $500.7 billion for social security in 2023, it is gradually becoming increasingly important for income.
According to the 2024 Trustee Report, it is estimated that between 2024 and 2033, welfare tax is estimated to generate an estimated $943.9 billion in cumulative revenue. While deductions to this tax will increase the length of social security for select retirees to stay for several years, it will eventually expand the long term of social security. – The maturity fund obligations are short and shortened OASI’s timeline for exhausting assets.
Now is a good time to mention Trump’s desire to reduce/eliminate taxes in other areas may return to Social Security troubles.
In October, the responsible Federal Budget Committee (CRFB) reviewed the full impact of Donald Trump’s tax agenda on social security. CRFB analysis determined that Trump’s proposal to remove taxes on overtime pay and tips would increase the 10-year Social Security deficit by $900 billion.
Overall, ending welfare taxes and eliminating taxes on overtime pay and tips will increase the Social Security deficit by an estimated $18.5 trillion over a decade. This will speed up OASI’s asset reserve exhaustion schedule and meaningfully increase how much benefits need to be cut if/when Oasi’s asset reserves dry.
The short-term benefits of Trump’s proposed social security change will outweigh the long-term costs of retirees.
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President Donald Trump wants to change social security, but Motley Fool initially published a huge cost for retirees
