Washington, D.C. – Former President Donald Trump has proposed eliminating federal taxes on Social Security benefits, a move that has sparked both excitement and concern. While this plan could put more money in retirees’ pockets, millennials—those born between 1981 and 1996—are wondering what it means for their future.
Who Benefits the Most?
Millennials who are closer to retirement and earn higher incomes stand to gain the most. Under the current system, individuals earning over $25,000 and couples making more than $32,000 see up to 85% of their Social Security benefits taxed. If this tax is removed, wealthier retirees could save thousands of dollars each year.
For example, someone earning around $100,000 in retirement could see an extra $6,000 in their pocket annually. That’s a significant boost, especially as the cost of living continues to rise.
Younger Millennials Could Face Trouble
While this tax break sounds great, younger millennials may not be as lucky. Many are still years or even decades away from claiming Social Security, and the biggest concern is whether the program will even be there when they retire.
Economists warn that cutting Social Security taxes could speed up the program’s insolvency. According to the Penn Wharton Budget Model, this proposal could drain the Social Security Trust Fund two years earlier than expected—moving the depletion date from 2034 to 2032. If that happens, future benefits could be cut unless Congress finds another way to fund the program.
What’s the Risk?
If Social Security runs out of money faster, younger generations may face reduced benefits, higher retirement ages, or even more significant reforms that could impact their financial security. For millennials relying on Social Security as a safety net, this is a major concern.
Experts suggest that younger workers start saving for retirement independently, rather than depending solely on government benefits. While Trump’s plan may help today’s retirees, it could come at the expense of future generations.
The Political Debate
As the 2024 election approaches, Trump’s Social Security proposal is already a hot topic. Supporters argue that retirees deserve relief, especially with inflation and rising expenses. Critics, however, say that cutting this tax without a replacement plan could add to the national debt and weaken Social Security’s long-term stability.
For now, millennials should keep a close eye on how this debate unfolds. The future of their retirement may depend on it.
