Changes to Social Security After Election Day- Here’s What Could Happen Depending on the Outcoming Today

With the upcoming U.S. presidential election, one of the most pressing challenges awaiting the new administration is securing the future of Social Security. This program, which cost approximately $1.3 trillion (5% of GDP) in 2023, remains the government’s largest direct expense. Yet, despite its vital role in supporting nearly 70 million Americans—including retirees, disabled individuals, and surviving family members—the program faces a funding cliff that could lead to a 21% reduction in benefits as early as 2034.

Urgent Reforms Needed to Secure Social Security’s Future

The looming threat to Social Security’s Old Age, Survivors, and Disability Insurance (OASDI) program stems from a combination of demographic changes and an increasingly strained trust fund. According to a recent report from the Social Security Administration’s Office of the Inspector General, this depletion of funds could cause severe economic distress, particularly for low- and middle-income retirees who depend heavily on these payments. However, both major-party candidates—Vice President Kamala Harris and former President Donald Trump—have yet to present detailed plans addressing this urgent issue.

Why Social Security Reforms Are Essential

Given that Social Security provides more than 40% of income for the average retiree, the impact of a 21% cut would be significant. The nonpartisan Committee for a Responsible Federal Budget (CRFB) has highlighted the real-world implications of these potential reductions. For example, a retired couple with a medium income who stopped working in 2033 could lose $16,500 from their annual Social Security income if no action is taken. This cut would drastically reduce the quality of life for many retirees who rely on Social Security for stability in their golden years.

The funding crisis facing Social Security is not unprecedented. In the early 1980s, the program faced similar challenges, leading then-President Ronald Reagan to enact reforms designed to safeguard the program for future generations. The Greenspan Commission, created to recommend solutions, led to lasting changes. Today, however, another round of reforms is needed to ensure Social Security’s solvency in the face of new demographic and economic pressures.

Proposed Solutions and Their Potential Impact

Experts suggest several possible solutions to address the impending funding shortfall. Burt Williamson, a retirement specialist, recommends a few key reforms that could stabilize the program without reducing benefits. One option is gradually eliminating the payroll tax cap, which currently limits Social Security taxable income to $176,100 in 2025. Removing this cap would increase revenue from high-income earners, though it may be controversial.

Another approach involves creating a “longevity account,” which would set aside up to 10% of future inflows as a long-term reserve. Unlike privatization, this fund would remain under government control and be overseen by a bipartisan committee. Williamson emphasizes that funds from the longevity account would be protected from borrowing by other government programs, ensuring their availability for Social Security.

Some conservative groups, like the Heritage Foundation, suggest raising the retirement age to increase program funding. Additionally, the American Academy of Actuaries proposes raising the current payroll tax from 6.2% to 7% to bolster the fund. These reforms present trade-offs, but they offer paths to secure Social Security’s future. The new administration’s response to this crisis will impact millions of Americans, making it imperative that leaders prioritize Social Security reform as part of their early agenda. With proactive planning, it is possible to safeguard this essential program for generations to come.