In June 2024, President Donald Trump addressed supporters at a campaign rally, stating, “As president, I will not cut one dime from Social Security or Medicare.” He reiterated a similar claim on social media in July 2024: “I will not cut one dime from Social Security or Medicare, and I will not raise the retirement age by even a day.”
Since resuming his role in the White House for a second term, President Trump has largely upheld these campaign commitments. However, he has indicated (and in some cases initiated) changes affecting the Social Security program. Here’s what retired individuals need to be aware of.
Image source: Official White House Photo by Joyce N. Boghosian.
President Trump’s Department of Government Efficiency (DOGE) is reducing Social Security costs
In January, President Trump enacted an executive order establishing the Department of Government Efficiency (DOGE). While its initial goal was to enhance productivity by modernizing federal technology and software, subsequent executive orders have broadened its mandate to include workforce optimization, cost efficiencies, and deregulation.
In response, the Social Security Administration (SSA) has lowered its staffing target to 50,000 employees, down from approximately 57,000. The SSA has also pinpointed cost-saving opportunities in contracts, grants, property, and technology, as well as in “common-sense approaches to printing, travel, and purchase card policies.”
According to the SSA, total savings will surpass $800 million in fiscal 2025. While this represents a significant portion of the estimated $6.5 billion in administrative spending, it still pales in comparison to the $110 billion deficit projected for its fiscal 2025 budget.
President Trump aims to eliminate the taxation of Social Security benefits
During his campaign, President Trump shared on social media, “Seniors should not pay tax on Social Security.” He has reiterated this promise since the election. In February, White House press secretary Karoline Leavitt announced that President Trump would implement the “largest tax cut in history,” which would include abolishing taxes on Social Security.
While Trump has quickly identified inefficiencies and initiated spending cuts through DOGE, I remain skeptical of his proposal to eliminate taxes on Social Security. Although the idea holds merit, the Social Security trust fund is already projected to be depleted by 2035. Removing taxes on benefits would hasten this timeline, putting potential benefit reductions closer on the horizon.
To clarify, the trustees estimate that tax revenue will cover only 83% of benefits when the trust fund goes insolvent in 2035. This would lead to an automatic 17% reduction in benefits unless Congress addresses the funding issue.
Taxes on Social Security account for 4% of the program’s funding. While this figure is relatively small, the funding challenge would still worsen if tax revenue were eliminated.
For example, a budget model from the reputable Penn Wharton business school suggests that Social Security could miss out on $1.5 trillion in revenue over the next decade if President Trump removes taxes on benefits. In that case, the trust fund could run out of funds two years earlier than currently expected, meaning retirees and other Social Security recipients could face benefit cuts as early as 2033 instead of 2035.
Nevertheless, Congress has historically avoided allowing the Social Security trust fund to become insolvent, and I believe lawmakers will find a solution to the financing issue before cuts are necessary this time. However, eliminating taxes on Social Security would complicate matters, giving Congress less time to resolve the issue.
