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This election cycle was like nothing we've ever seen before on American soil. Regardless of who the presidency, it was going to represent a first for America. Either we'd be welcoming the first woman into the Oval Office, or the first candidate with no prior political or military experience. As we now know, the will of the people elected Donald Trump as the soon-to-be 45th president of the United States.
Though Hillary Clinton may have lost the election, she's not alone. Senior citizens stand to be among the biggest losers of Donald Trump's victory.
Seniors may be this election's biggest losers
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Heading into this election, many seniors had one issue that stood far above the rest in terms of importance: the longevity and health of Social Security.
According to the Social Security Administration (SSA), 61% of seniors receives at least half of their monthly income from the SSA, with Gallup's data showing that 87% of current retirees relies on Social Security as either a "major" or "minor" component of their monthly income. Without Social Security, it's fair to say that many of your retired workers could struggle to make ends meet.
But Social Security is far from healthy. Demographic shifts that include the retirement of baby boomers and lengthening life expectancies are putting an incredible amount of strain on the program. Based on projections from the Social Security Board of Trustees, the program will begin paying out more to beneficiaries than it's bringing in by 2020, ultimately causing the program to burn through more than $2.8 trillion in spare cash by 2034. If Congress were to do nothing, the Trustees have estimated that a 21% across-the-board benefits cut would be needed to sustain the program through 2090.
Senior citizens want a fix for Social Security, but they're unlikely to get it from Donald Trump.
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Trump's Social Security plan may not help seniors
Hillary Clinton's plan for Social Security, while perhaps a bit aggressive on the benefits side of the equation with calls to expand payouts for low-income individuals, caregivers, and women, would have called for the rich to pay more. The current payroll tax of 12.4% (which is often split down the middle between you and your employer) applies to combined earnings of between $1 and $118,500 for 2016. Anything earned above this amount is free and clear of taxation for the purposes of Social Security. Clinton would have created a payroll tax moratorium between the inflation-adjusted high point ($118,500) and $250,000, with the payroll tax kicking back in for combined earnings above $250,000. Regardless of whether raising the payroll tax cap is something you supported or not, one thing was clear: It would have brought additional revenue into the program.
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Trump, on the other hand, believes in simply honoring the promises made to seniors when they retired. In other words, he has no plan other than to kick the can further down the road. Trump has opined that his tax cuts for individuals and corporations, coupled with infrastructure spending and a focus on U.S. energy, should grow the economy at a quick enough pace that payroll tax revenue rises in accordance with individual income. If payroll tax revenue rises, then there would presumably be no shortfall in the budget by 2034. But, this is a tall order. If Trump's tax cut fails to result in a boost in consumption, then weaker growth combined with a potentially growing budget deficit could further dampen the outlook for Social Security.
Furthermore, the Tax Foundation has suggested that Trump's revised tax proposals would result in a $3 trillion reduction in revenue being collected by the federal government over 10 years. If less revenue is collected and the national debt keeps rising, the percentage of the annual federal budget devoted to servicing the interest on the national debt will increase, potentially leaving less and less wiggle room for Social Security, Medicare, and Medicaid, which cumulatively already combine for about half of all annual federal expenditures.
With Trump effectively tossing aside the ideas of increasing payroll taxes, raising the payroll tax cap, or even raising the retirement age, it doesn't look as if a Social Security fix will be in order during Trump's presidency, and that's a worrisome development for our nation's growing number of senior citizens.
