In the course of his campaign for the presidency, Donald Trump made a number of pledges concerning Social Security that struck a chord with the people of the United States.
Through his assurances that he would not alter the structure of Social Security and that he would maintain the same retirement age, he heightened the expectations of millions of beneficiaries of the program.
In addition, he put out a few propositions that appeared to be extremely favorably received, such as the elimination of federal taxes on Social Security benefits, which would, among other things, reduce the amount of financial burden that is placed on individuals who are dependent on this income.
Although these plans received a sufficient amount of support throughout the campaign, the implementation of these changes to Social Security faces substantial hurdles.
This is due to the fact that some of the pledges may be detrimental to the program in its current state. Let us break it down so that we may get a better understanding of the impact.
Will there be changes to the retirement age in the US?
A commitment to maintain the present retirement age scale was the first promise that Trump made throughout his campaign.
The United States Congress has been considering raising the full retirement age for years in an effort to make up for the gap in Social Security benefits; however, this policy has consistently been deemed unpopular by the general public, and there has been little movement made toward putting it into effect.
Trump’s idea is to keep the retirement age at its existing level, which is between 66 and 67 years old, depending on the date of birth of each beneficiary. This is in contrast to the proposal to raise the retirement age to 70 years old.
Retirees will be able to access their full benefits at the age they have already planned, without having to face delays or alterations in their retirement plans, as Trump has committed not to make adjustments that affect present or future Social Security beneficiaries. This means that retirees will be able to access their benefits at the age they have already planned.
It is far too early to see any significant improvement by raising the retirement age to 70 years old; however, the measure could help with shoring up the program for the future. Raising the retirement age would not have really helped with the current shortfall faced by Social Security.
It is projected that the program will run out of funds by the year 2033. In spite of this, it would not be difficult to fulfill this campaign pledge, and the people of the United States would not be adversely affected as a result of it.
The Importance of Federal Tax Exemption for Retirees on Social Security
The other item that Trump offered, which has been enthusiastically approved by pensioners in the United States, is an exemption from federal taxes on Social Security income.
If an individual has a provisional income that is greater than $25,000 or if a married couple filing jointly reports an income that is greater than $32,000, then this individual’s Social Security benefits are currently subject to taxation.
Up to fifty percent of the benefits may be subject to taxation in such circumstances. Consequently, this indicates that a significant number of individuals who are receiving benefits are at risk of having their net income reduced as a result of tax contributions if they have other sources of income in addition to Social Security disability benefits.
The elimination of these taxes would not only reduce the financial pressure that pensioners are under, but it would also make it possible for Social Security income to be entirely allocated to supporting the necessities of daily life, such as housing, food, and medical bills.
This plan has two problems that need to be addressed. The first thing to keep in mind is that Social Security benefits are not the same thing as temporary income.
The calculation of a recipient’s provisional income involves adding up their gross income, interest that is exempt from taxation, and fifty percent of their Social Security benefits.
To put this into perspective, individuals who are subject to taxes have funds that are not limited to Social Security benefits to assist them throughout their retirement years.
Additionally, those who are in the greatest need of assistance are already exempt from paying taxes because the threshold for taxes is already extremely high.
Retirees with higher incomes who do not have trouble paying essentials would be the only ones to benefit from this opportunity.
The second issue is that the Social Security Trust is dependent on these taxes in order to renew itself. Since the poorest Americans are not the ones who will be harmed by the taxes, it is the poorest Americans who will be hit by the even more significant shortfall of the program, which Trump has committed to safeguard.