I’m a Retiree: 3 Reasons I’m Worried About the Future of Social Security if Harris Wins the Election
Regardless of the political party in control, the U.S. has faced many issues over the past several decades, including a global pandemic, unemployment, and high inflation. One issue on the minds of many people, retirees, and those facing retirement, is the solvency of the Social Security Trust Fund.
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As of the last report from the Social Security Administration, the Old-Age and Survivors Insurance (OASI) fund has enough money to pay full benefits for eligible Americans through 2035. After that, the Administration could cover at least 75% of benefits, according to the Center on Budget and Policy Priorities.
While some Americans believe that Social Security is destined for demise regardless of who wins the November presidential election, some retirees are particularly concerned if the Democrats take office.
“My financial planner told me to plan as if [Social Security] is not there,” said Renee S., a retired marriage and family therapist in Colorado Springs, CO, who also maintains a part-time business to supplement her retirement savings while helping others through her knowledge and experience.
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Retirees Hedging Their Bets on Social Security
In addition to her concerns about Social Security, Renee S. also represents another Boomer trend: Retirees embarking on second careers, even in a part-time capacity. A recent survey from CNBC found that 28% of retirees are currently working. Of those planning to retire, 55% said they anticipate working in retirement, whether for financial or emotional reasons. If Social Security benefits are reduced within their lifetime, that extra savings could be a lifeline.
While both Donald Trump and Kamala Harris have vowed not to directly cut Social Security benefits if they become president, neither party has laid forth a plan to specifically reduce or eliminate the shortfall.
In fact, both presidential candidates have promised tax cuts that could increase the fund’s shortfall. Trump has said he wants to eliminate taxes on Social Security, which could be good in the short term for higher-income retirees.
Raising the Special Minimum Benefit Could Deplete the OASI Fund Faster
The Biden-Harris Administration had proposed raising the special minimum benefit for low-wage earners. Right now, that benefit begins at $50.90 and tops out at $1,066.50 for someone who has worked 30 years, GOBankingRates previously reported. The Biden-Harris Administration proposed setting the special minimum benefit at 125% of the Federal Poverty Line, according to an analysis from Penn Wharton, University of Pennsylvania.
“I am concerned Harris will follow through with the proposal to increase the special minimum benefit for long-term low-earners with work histories between 10 and 30 years. The bill Harris sponsored asked for an increase to the minimum benefit, which will deplete the fund,” Renee S. said. “I believe Trump will ensure the Social Security fund will remain intact.”
Tax Cuts Could Leave the Government with a Larger Deficit, Impacting Social Security
A forecast from Penn Wharton, reported by CBSNews.com, found that Trump’s tax cuts, which include removing the tax on Social Security benefits, would increase the federal deficit by $5.8 trillion over the next decade, while Harris’ proposed tax cuts could add $2 trillion. Since interest on the national debt impacts government programs and spending, this is a key concern when it comes to preserving Social Security benefits.
Rising Inflation Means More Retirees Could Rely on Social Security
Renee S. said she is planning to defer collecting benefits until she reaches Full Retirement Age. This smart money move can put more cash in her pocket later on, as long as the benefits are available to collect.
However, the inflation of the past several years has Renee S. concerned about the strategy and about her plans to look at Social Security benefits as a “nice-to-have” rather than a necessity.
“I planned not to have Social Security for the future. But that was based on the cost-of-living back then. With the increased cost of living now, Social Security would be helpful,” she said. “I am concerned for myself as well as others who are on a fixed income and can barely make it with the increased cost of living.”
Final Note
Ultimately, though, financial experts remind us that the future of Social Security, and especially your own financial future, is not in the hands of any one person, including the President of the United States.
“Congress approves the budget and the debt ceiling,” said Mark Malek, CIO at the financial advisory firm Siebert. “So, if you really care about taxes, pay attention to the Senate race, which is also too tight to call at the moment. The next President still has to sign off on whatever lawmakers come up with. So, if you earn your wages in tips, rely on overtime, have lots of young kids, are middle class, live in a high local tax region, earn more than $400k a year, or rely on Social Security, I would not go out and start spending more money in hopes of a miracle.”
Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: I’m a Retiree: 3 Reasons I’m Worried About the Future of Social Security if Harris Wins the Election