There’s one significant change left on the President’s agenda, but implementing it won’t cause any lasting damage.
For many retirees, Social Security is a crucial income source.
Over the last 23 years, Gallup, the national polling organization, has asked retirees how vital Social Security income is for their financial security. They consistently find that between 80% to 90% of participants express a need for this income to manage their expenses effectively.
However, this crucial program isn’t fixed. Changes are made annually and can influence everything from how current and future beneficiaries manage their information to the monthly payouts they receive from the Social Security Agency (SSA).
Five significant changes to Social Security during Donald Trump’s administration
Since Donald Trump began his second term 100 days ago (as of April 29th), several changes regarding Social Security have taken place. Here’s a quick look at the five most notable adjustments he’s overseen, along with one key change he still aims to implement.
1. Staff reductions and office closures due to cost management
One of the first actions Trump took upon starting his second term was establishing the Bureau of Government Efficiency (DOGE) through an executive order. This initiative, supported by notable figures, including Elon Musk, aims to identify ways to cut government expenses and boost efficiency.
Following DOGE’s recommendations, the SSA has seen its workforce shrink from 7,000 to 50,000 employees, with some offices also being shut down. It’s estimated that by 2025, the SSA will save over $800 million, a stark contrast to its projected $1.392 trillion reduction in management costs for 2023.
2. Elimination of Social Security paper checks
Another noteworthy change in Trump’s initial 100 days is the plan to phase out paper checks for beneficiaries. Currently, around 486,000 individuals receive paper checks each month.
On March 25, he signed an executive order mandating that, by September 30, 2025, all executive agencies and Social Security recipients must transition to electronic payments. The reasoning behind this move is that check fraud has escalated, making digital payments a more efficient and less fraud-prone option.
3. Improved personal identification requirements
Significant changes have also been made to identity verification processes under Trump.
Effective April 14th, most beneficiaries are no longer permitted to update their direct deposit information or apply for retirement/survivor benefits over the phone. Instead, these actions must be completed through their online “My Social Security” accounts with two-factor authentication or in person at SSA offices, although exceptions exist for certain individuals, like those who are terminally ill or recently released from prison.
This modification reflects the SSA and Trump’s administration’s efforts to combat perceived fraud.
4. Reversal of Biden’s overpayment rules
The fourth significant modification is the reversal of rules regarding overpayments established during Biden’s presidency.
There are instances when the SSA mistakenly sends more funds to beneficiaries than they are entitled to. Biden’s approach had lowered the clawback rate to 10% of monthly checks until overpayments were recovered.
However, during Obama’s administration and in Trump’s first term, the clawback rate was set at 100%. The Biden-era policy has now been replaced, implementing a 50% clawback rate, which could save the federal government around $7 billion over the next decade.
5. Appointment of Frank Bisignano as the next SSA commissioner
The fifth change Trump has made within his first three months is the appointment of Frank Bisignano as the new SSA commissioner.
Currently the CEO of Fiserv, a financial services technology company, he is expected to resign from his position upon confirmation or by June 30th, which comes first. Bisignano brings valuable insights into digital payment technologies, crucial as the SSA moves towards a paperless system.
On April 2, the Senate Finance Committee approved his nomination in a close 14-13 vote along party lines. If he secures a full Senate vote, he’ll take over from deputy SSA commissioner Leland Dudek.
Changes to Social Security still pending on Trump’s agenda
Yet, perhaps none of these adjustments can encompass the more ambitious proposals Trump had during his campaign.
In a late July social media post, Trump stated, “seniors shouldn’t pay taxes on Social Security.”
This suggests he aims to eliminate the taxation of Social Security benefits, which could potentially boost monthly payments for about half of retired beneficiaries.
While Trump’s intention to enhance checks for retirees sounds good, it does seem to overlook crucial issues.
Going back to 1983, Social Security’s asset reserves were in trouble, necessitating reform. That year’s amendments gradually raised payroll taxes and adjusted full retirement ages, introducing the taxes beneficiaries currently dislike.
Since 1984, up to 50% of benefits can be taxed if the provisional income—calculated as adjusted gross income plus tax-exempt interest and half of benefits—exceeds $25,000 for individual filers or $32,000 for couple filings. A decade later, a second tier allowed for up to 85% of benefits to be taxed at federal rates for those exceeding $34,000 in provisional income as single filers and $44,000 as joint filers.
This tax is particularly resented by beneficiaries as those income thresholds haven’t been adjusted for inflation, which many see as a form of double taxation. Rising salaries and annual cost-of-living adjustments have increasingly exposed more elderly households to this tax.
Despite Trump’s aversion to taxing benefits and his push to eliminate it, the tax plays a critical role in funding. According to a 2024 Social Security Council report, taxation on benefits is projected to generate $943.9 billion between 2024 and 2033.
Removing this tax would eliminate one of the key funding sources for the SSA. Given that the Old Age and Survivor Insurance Trust Fund (OASI) is expected to exhaust its assets in just eight years, ending this tax could lead to quicker depletion, potentially resulting in more drastic benefit cuts than the foreseen 21% reductions for retirees and survivor beneficiaries by 2033.
In essence, there’s no realistic scenario where abolishing taxes on Social Security benefits is beneficial for major US retirement programs.
