Trump Promises to Abolish the Social Security Tax: Hopes and Challenges for Retirees

Former US President Donald Trump announces that, in the event of his re-election, he will abolish the tax on Social Security benefits—a piece of news welcomed by around 40% of retirees who currently have to pay this tax. Trump's official campaign platform remains vague, but he emphasizes this pledge in public appearances and through his social media. According to the non-profit Senior Citizens League, a similar legislative proposal presented to the US House of Representatives in January could have saved an average retirement household $497.52 in 2022. Without the burden of this tax, retirees could use these savings for debt repayment or building an emergency fund, which is advantageous, especially in economically unstable times. However, experts warn that abolishing the tax could significantly impact Social Security funding. The Committee for a Responsible Federal Budget estimates that the savings could result in a deficit of up to $1.8 trillion by 2035. Additionally, this would advance the depletion of the Social Security Trust Fund by a year to 2032. Such a drastic reduction in revenue could necessitate significant budget cuts, which in turn would lead to lower pension benefits. Retirees thus face the challenge of preparing early for a potential 25% reduction in their Social Security benefits. A more mindful approach to personal finances can be crucial in this regard. Measures such as creating a detailed budget or taking on a part-time job can help offset income losses and maintain long-term financial stability.