3 Social Security Changes That Could Affect the Wealthy If Trump Is Elected
Written by
Laura Beck
Edited by
Chris Cluff
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The future of Social Security is a hot-button issue, and the closer we get to the election, the hotter it gets. With former President Donald Trump potentially returning to office, many Americans — including the wealthy — are wondering how his policies might reshape the program.
GOBankingRates spoke with financial experts to get their opinions on the issue. Anthony Termini, an expert contributor at Annuity.org, set the stage for the discussion. “Social Security is expected to run out of money in 2033. At that time, income from payroll tax deductions will cover only 79% of benefits,” he said.
This backdrop of financial instability for the program frames the potential changes a Trump administration might implement. Here are three Social Security changes that could impact the wealthy if Trump is elected.
Elimination of FICA Withholding
Perhaps the most dramatic change Trump might pursue is the elimination of FICA withholding. Termini explained, “Back then [in his 2020 campaign], he pledged to eliminate FICA withholding — the federal payroll taxes that fund Social Security and Medicare. If he were elected, I would expect him to make good on that promise.”
This change could have significant implications for wealthy Americans. Termini said, “Trump’s position means that all Americans — including the wealthiest — would pocket an additional $12,897.90 annually if FICA taxes are eliminated.”
However, this short-term gain could lead to long-term pain. Termini warned, “Without that funding, it is difficult for me to see how Social Security could survive.”
Potential Reduction in Benefits
While Trump has vowed to protect Social Security, some of his statements suggest potential cuts. Aaron Cirksena, founder & CEO of MDRN Capital, pointed out, “Trump has discussed cutting entitlements in order to address the concern of waste and fraud. This could mean reducing benefits.”
For wealthy Americans, this could mean a significant loss of income in retirement.
Termini explained, “For those entitled to the maximum benefit — which is generally available only to the highest wage earners — the income loss would be as high as $54,660 a year. The timing of that loss would be dependent on how rapidly the trust fund balance is drawn down.”
No Change to Full Retirement Age
For current and soon-to-be retirees, Trump has indicated he won’t propose changes to the full retirement age. Termini noted, “His campaign website echoes that and adds that he won’t propose changes to (i.e., raising) full retirement age (now between 65 and 67 years).”
This could be particularly beneficial for wealthy individuals who have the means to retire early or at full retirement age, as they won’t need to adjust their retirement plans to account for a later eligibility date.
The Dichotomy of Trump’s Position
Termini highlighted an interesting contradiction in Trump’s stance on Social Security, saying, “From the stump he boasts vociferously that he will protect Social Security. His campaign website echoes that … That’s all the information we have from him and the campaign on the subject.”
This apparent contradiction between promising to protect Social Security while also proposing changes that could fundamentally alter its funding structure creates uncertainty about the program’s future under a potential Trump administration.
Impact on Wealthy Americans
These changes could have a mixed impact on the wealthy.
On one hand, the elimination of FICA taxes would provide an immediate boost to their take-home pay. On the other hand, the potential reduction or loss of Social Security benefits could lessen their retirement income. Of course, the very wealthy would likely not have to rely on Social Security, so the existence of the program itself might not be that important to them.
The other thing that’s important to note is that any major reforms would require congressional approval. So, whether or not anything changes will largely depend on the makeup of Congress following the 2024 election.
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. For more coverage on this topic, check out 3 Social Security Changes That Could Impact the Wealthy If Harris Is Elected.
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