Social Security 2025: 5 Reasons Retirees Should Care About the Results of the Presidential Election
Written by
G. Brian Davis
Edited by
Amber Barkley
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Social Security benefits are as close to a “sacred cow” as it gets in American politics.
“Any presidential campaign would be doomed if they looked to scale back Social Security in any way,” noted Jake Falcon, chartered retirement planning counselor and CEO of Falcon Wealth Advisors. “The baby boomer generation just makes up too large a percentage of the voter population.”
Even so, former President Donald Trump and Vice President Kamala Harris’ policy proposals could help or hurt retirees’ take-home benefits. Consider the following effects — both good and bad — that the candidates’ proposals could have on retirees.
Immigration (and the Dire Math of Demographics)
The House Budget Committee forecast in May that Social Security will become insolvent by 2033 if no policy changes are made.
Why? Because we have an aging population and low birth rate.
Attorney Bethany K. Laurence, a retirement expert at Nolo, pointed to some daunting numbers. “When Social Security was established in the 1930s, the worker-to-beneficiary ratio was over 15 to 1. By 2023, that ratio had shrunk to just 2.7 to 1, and the Social Security Administration estimates it will fall to 2.3 by 2035.
“This decreasing ratio means that less money will be put into the Social Security system, while more gets taken out.”
That’s where immigration policy enters the conversation. Data from the Center for Immigration Studies shows that native-born Americans have a total fertility rate of just 1.69 per woman — far below the population replacement rate of 2.1. In other words, native-born Americans aren’t having enough children to sustain population growth.
Immigration helps solve this demographic problem in two ways. First, immigrants bolster the total population of the U.S., particularly the younger working population. Second, immigrants have a significantly higher birth rate, adding more children — and future workers — to the population.
Trump has famously pledged to reduce immigration, vowing to launch the “largest domestic deportation operation in American history,” as reported by NBC. That would mean fewer working-age adults paying into Social Security and fewer families with higher average birth rates.
Taxation of Social Security Benefits
As a more favorable policy for retirees under Trump, the former president wants to reduce retirees’ tax burden.
“On the campaign trail, former President Donald Trump has proposed making Social Security tax-free,” said financial advisor Dan Casey, founder of Bridgeriver Advisors.
That would certainly help retirees, but it would leave other taxpayers on the hook for the reduced revenue.
“If taxes are no longer being collected on Social Security, this could increase our federal deficit unless higher taxes or tariffs are collected to help offset the loss,” Casey said.
Renewal of TCJA Rules
Arguably the cornerstone legislation of Trump’s term in office, the Tax Cuts and Jobs Act of 2017 (TCJA) doubled the standard deduction and shifted income tax brackets to reduce net tax rates for most Americans. For many retirees on a fixed income, that meant greater take-home income.
However, the TCJA is scheduled to expire at the end of 2025. While a victorious Trump would likely push to renew it, the future of these tax changes looks far less certain under a Harris administration.
Raising the Cap on FICA Taxes
In addition to regular income taxes, the federal government also collects FICA taxes (Federal Insurance Contributions Act) from your paycheck, which fund Social Security and Medicare.
The IRS stops charging FICA taxes above $168,600 in 2024, because Social Security benefits are likewise capped. In Harris’ published statement of policy priorities, she vowed to “strengthen Social Security and Medicare for the long haul by making millionaires and billionaires pay their fair share in taxes.”
That likely means raising or removing the income cap on FICA taxes. In 2019, she co-sponsored the Social Security Expansion Act with Senator Bernie Sanders, which aimed to do just that.
Sanctity of Retirement Accounts
In the 2025 budget proposal, the Biden-Harris White House proposed targeting the “excessive accumulations by high-income taxpayers in tax-favored retirement accounts.”
While it neglected to propose any specific policies, it raises questions about how a potential President Harris would treat retirement accounts. Would she push for a dollar amount limit on balances, beyond which balances lose their tax benefits? Ban back-door Roth IRA contributions? Reduce the income ceiling for contributing to IRAs?
It makes many middle-class workers nearing retirement nervous when politicians start calling retirement account benefits into question.
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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