President Trump Promised Not to Hurt Social Security, but There's Only 1 Way to Avoid That

Social Security benefits are poised to take a substantial leap in a few months, thanks to the 2027 cost-of-living adjustment (COLA), potentially offering some relief to families struggling with high inflation this year. But the program's long-term outlook is less optimistic. We're now just six years out from a possible 22% cut for all beneficiaries.

In his 2024 campaign, President Donald Trump vowed not to cut Social Security benefits, and it's likely that Washington will take steps to avoid this outcome. But avoiding cuts carries costs of its own.

President Donald Trump. Image source: The White House.

There's only one way to avoid benefit cuts

Social Security faces a possible benefit cut because its expenses have exceeded its income for years. This is due to changing demographics and slower wage growth among average earners compared to decades past. So far, the program has been getting by, tapping the trust funds to cover the shortfall between tax revenue and scheduled benefits. But that won't work much longer.

Once the trust funds are depleted in 2032, the program will only have income from payroll taxes and Social Security benefit taxes to fund future benefits. And avoiding cuts will likely mean raising these taxes.

Increasing the payroll tax rate would reduce workers' take-home pay by hundreds or thousands of dollars per year. This could actually make them more dependent on their Social Security checks in the future if the tighter budget leaves them unable to save for retirement on their own.

Raising benefit taxes on seniors would leave them with less money to cover their expenses. Many would tell you they're already struggling to get by on what they have, so that's obviously not ideal.

There are ways to reduce the burden on ordinary Americans

Ordinary Americans will almost certainly have to pay more to fund future Social Security benefits. Still, we don't know how much they'll owe yet, or which generations will shoulder the extra costs. It may not be as bad as you think, though.

Some options shift more of the burden to high earners. For example, current law only requires Americans to pay Social Security payroll taxes on the first $184,500 they earn each year. If this ceiling were eliminated, wealthy Americans would pay more into the program while average workers wouldn't notice a difference. This wouldn't be enough to eliminate the shortfall, but it would reduce the payroll tax increase needed to keep benefits going as scheduled.

Some members of Congress have proposed doing exactly this, but only time will tell whether it makes the final reform. For now, all you can do is focus on managing your own budget and retirement savings to the best of your ability and stay ready to adapt when Washington announces its new plan.

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