3 Ways the Trump Economy Could Affect Your Social Security in 2025
Written by
Chris Adam
Edited by
Zuri Anderson
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President Donald Trump has talked a great deal about the economy and consumer finances over recent months and years. Specifically, Trump has discussed some of his plans for international trade, taxes and funding for social programs.
Retirees have been particularly interested in Trump’s plans for Social Security and battling inflation. Many hope Trump will lay out his specific plans as soon as possible to help them with planning their finances for the future.
While the debates continue over how to fund Social Security in the years to come and how to help retirees and other consumers deal with rising prices, there are already indications of three big ways the Trump economy could affect Social Security in 2025.
Future Funding
Given the talk over the past year about a bleak future for Social Security, retirees may be concerned about how long their benefits will continue, and how the program is funded in the coming years under the Trump administration.
“Regarding Social Security, a deregulation and tax-cut-oriented Trump economy could influence social program funding,” said Adam Garcia, a certified financial planner and founder of The Stock Dork.
Those comments come amid some speculation that the Trump administration may be looking to make cuts to Social Security and Medicare. However, some Republican leaders have pushed back and said there would be no cuts, according to ABC News.
Funding is just one factor that could affect your Social Security in coming years.
“Other key factors include federal budget priorities that could impact funding mechanisms, tax policy changes that could affect overall program funding and any adjustments to Medicare premiums,” according to Andrew Lokenauth, money expert and founder of Fluent in Finance.
Cost-of-Living Adjustments
Lokenauth said another key factor is changes to the cost-of-living adjustments (COLA). For 2025, Social Security’s COLA is 2.5%. That’s the lowest since 2021 and well below the 5.9% and 8.7% raises in 2022 and 2023, respectively.
Financial planners and retirees may be closely watching any moves by the Trump administration when it comes to future COLA amounts. Garcia added that retirees should watch those adjustments carefully to better plan for their financial futures.
“Retirees need to keep up with changes in laws that may affect benefit levels or cost-of-living adjustments and diversify savings or purchase annuities to act as financial buffers,” Garcia said. “Retirees can better guarantee their fiscal stability by proactively managing their investments in anticipation of future governmental decisions on investment matters.”
Inflation
Retirees may also be closely watching inflation and prices, especially when they rely on a fixed income to meet their needs. After all, a smaller COLA reflects cooling inflation.
While Trump has signaled he has plans to improve the economy and help bring down prices, not everyone is convinced.
According to CNBC, “Federal Reserve officials at their December meeting expressed concern about inflation and the impact that President-elect Donald Trump’s policies could have, indicating that they would be moving more slowly on interest rate cuts because of the uncertainty.”
Editor’s note on political 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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