January brings changes and many unknowns. Imagine depending on a monthly check that covers the basics of living, from food to medicine. And then suddenly you are told that this money will decrease in the very near future! This is the reality that millions of Social Security beneficiaries in the United States are facing, for whom these programs are practically essential.
This is where President-elect Donald Trump comes into play, who, despite not having yet taken office, has proposed a plan that could redefine the system.
Who benefits from Social Security?
Last November 2024, approximately 52 million retirees took home a Social Security check estimated at $1,900. Although it is not a large sum of money, it has proven to be a vital source of income for all former workers in this country. And, since 2002, between 80 and 90% of people surveyed by Gallup confirmed that they need Social Security to survive each month. However, despite being something crucial for millions of users, Social Security is facing serious challenges that await repair by new rulers who guarantee the stability of this program.
What is happening with Social Security?
Since it was created in 1935, as we have said, it has been a fundamental pillar for millions of Americans. But now the system is facing a collapse and in the 2024 trustee report it has projected that these funds for old-age and survivors insurance (OASI) could be exhausted in 2033. This would mean a reduction in benefits of up to 21%. if the relevant measures are not taken soon!
What are the reasons behind it?
A situation of financial imbalance that has been growing like a snowball for almost four decades! The most recent report estimates a deficit of 23.2 trillion dollars for the next 75 years, and, although this reality is not new, what is alarming is the lack of political commitment to implement viable solutions, because to this day no one has agreed to solve this problem.
It is necessary to emphasize that the depletion of OASI asset reserves does not mean that Social Security is bankrupt or is going to disappear, but that they are not sustainable at this time.
Trump and his controversial proposal:
In the midst of this panorama, the recently elected president Donald Trump has made some statements that have sparked debate throughout society. Published in Truth Social, Trump stated that “Retirees should not pay Social Security taxes” and although many have felt hope with these statements, many experts and legislators have expressed their concern.
According to analysts, eliminating SSA taxes could increase the monthly expenses of almost half of the beneficiaries, but it would also create a large fiscal gap that should be considered, since, only between 2024 and 2033 (the year in which the reserves are estimated to be exhausted), the funds could collect 944 billion dollars, and, of course, eliminating this would cause the pension funds to be exhausted much sooner. According to experts in the field, this could translate into tax increases for other sectors of the population to compensate for this loss and alleviate its effects by looking for a “substitute”.
Does this plan have consequences?
We already know that Trump wants to eliminate taxes and that nobody likes their benefits being taxed, but this income is a necessity for Social Security (which is only fed by the payroll tax on labour income, income from active reserves and taxes on Social Security benefits), and, currently, Social Security is spending more than it takes in, with this proposed plan it would increase expenses significantly and would not collect any of them.
What is needed to carry out Trump’s plan?
Trump needs 60 votes in the Senate to modify the Social Security Law, it is unlikely because even if he got all the Republican senators to vote in favour of him, he would still need seven Democratic senators to do so as well.
So, while the future of Social Security hangs in the balance, what is at stake is not just a government program but the livelihoods of millions of Americans, which will mean that these decisions will not be taken cold-bloodedly or lightly, but will be well debated in Congress to obtain the best solution for everyone (and for our future!).