5 Ways the 2024 Election Could Reshape Social Security

Social Security is a critical area as the 2024 U.S. presidential election approaches. Millions of retirees and future beneficiaries are closely watching the possible changes as proposed policy shifts from former President Donald Trump and Vice President Kamala Harris could affect this vital program. Both candidates offer slightly different paths forward, with projections showing a potential shortfall for social security funding within the next decade.

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Here are six potential changes that could drastically reconfigure social security benefit levels, eligibility, tax impact and program sustainability.

Raising the Eligibility Age

A major difference between the Republicans and Democrats is the age at which you are eligible for full Social Security benefits. Many Republicans, including Trump’s camp, are floating the idea of raising the retirement age to match Americans’ longer life expectancies, according to FOX News.

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Gabriela Perozo, host of Claro y Directo, shared with GOBankingRates that “Republicans suggest raising the eligibility age for social security, which would mean future retirees might need to wait until age 67 or later to receive full benefits.”

As people approach retirement age, this could have a big effect on financial planning and lifestyle, especially those doing physically demanding jobs.

Republicans hope to limit the program’s growing costs by raising the age threshold. However, that change may not be easy for workers whose jobs might not be sustainable until they are in their late 60s.

While improving Social Security’s long-term solvency, this adjustment could disproportionally affect those working in lower-income or physically demanding jobs, who may have difficulty working longer.

Adjusting Benefits Based on Income

One proposal in the upcoming 2024 U.S. election is changing Social Security benefits based on income levels. Trump says if he wins the election, cutting benefits for higher-income retirees would help ensure the program’s long-term viability without impeding the benefits of lower-income beneficiaries.

Tech entrepreneur Nick Nagatkin explained to GOBankingRates that “Republicans are focused on reducing Social Security’s long-term costs, potentially by cutting benefits for high-income earners.” The move could help extend solvency, but critics warn that the approach will discourage higher earners from supporting a system that cuts their benefits.

Then there’s the Democratic approach, Harris’ idea, which stresses helping lower-income retirees gain more benefits and finding other funding sources from wealthier people.

Democrats hope to strengthen the program’s safety net for the people it intends to help by concentrating on income-based benefits. The shift could ease poverty among older Americans, but new tax reforms would be needed to expand benefits without eroding the program’s financial health.

Lifting the Payroll Tax Cap

To help pay for enhanced Social Security benefits, Democrats have backed a payroll tax cap increase, which limits the amount of pay subject to Social Security taxes. Only the first $160,200 of annual income is taxed for Social Security.

The cap would raise or eliminate higher earners’ contributions depending on the situation, which proponents say would help stabilize Social Security funding.

Nagatkin supports this approach’s potential, explaining, “Lifting the payroll tax cap could provide immediate relief for beneficiaries.” However, lifting the cap may not be the answer in the long run. If economic conditions deteriorate after the election, additional steps may be required to ensure the program’s long-term sustainability.

Expanding Benefits for Vulnerable Populations

The Harris campaign’s Social Security policy revolves around expanding benefits for those who are financially vulnerable, the poor and seniors, widows and disabled people. Democrats contend this expansion could slash senior poverty rates in half, particularly among women or minorities who tend to earn less over their lifetime.

The increase proposed in this would align with the Democratic objective to design a more equitable Social Security system that provides special help to the most vulnerable. Perozo also emphasizes, “Increased benefits are primarily targeted at low-income retirees, while high earners would see higher payroll taxes to fund these changes.”

A problem with this approach is that it would provide more support for those in need but is criticized by those who worry that the tax burden will be too great on those who earn more and that stakeholders will balk at a tax increase.

Political Dynamics and Policy Implementation

The direction and the feasibility of Social Security reforms will depend on the outcome of the 2024 election. Even the most ambitious Social Security plans would stall if the winning candidate doesn’t have a supportive Congress.

Another thing to consider is that if you try to make sweeping changes in your policy, groups that represent retirees, low-income workers, and other people who will be affected will push back, making the adoption of any policy even more difficult.

Political power dynamics, experts say, are important. They believe that Social Security policy in 2024 will be determined by the political actors and the economy after that. The election outcome means that the legislative landscape in which Social Security policies can change will most likely determine how and how fast they can change. For those relying on Social Security, the election’s outcome could mean a hit to their monthly benefits and a future for the program.

Key Takeaways

However the 2024 election plays out, the Social Security options on the table represent starkly different visions of the future program.

The Trump administration may favor measures to cut costs, such as raising the retirement age or reducing benefits for richer retirees.

By contrast, Harris believes Social Security is inspired for that to work, which means expanding benefits for vulnerable populations and lifting the statutory payroll tax cap.

For retirees and those in their final years, the stakes could not be higher, as financial security could be upended by the program’s long-term future. This election will shape many years of economic welfare.

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This article originally appeared on GOBankingRates.com: 5 Ways the 2024 Election Could Reshape Social Security