The old Chinese saying, “May you live in interesting times,” may be more true than ever before.
With this in mind, here are three key Social Security-related questions that advisers must be prepared to answer when speaking with clients ahead of President-elect Donald Trump taking office next month.
1. How will baby boomers’ Social Security benefits be affected? Trump is pragmatic, and any changes for boomers would be political suicide, not only for him but for GOP in general. Changes to Social Security that involve this demographic group seem very unlikely, given the generation’s size and economic and political might.
2. What about Social Security for younger generations? The key to understanding Trump is knowing who is in his inner circle and how these people view Social Security.
Let’s consider three key players:
- Michael Korbey, who is working on Trump’s transition team, advocated for privatizing Social Security under the Bush administration. In the mid-1990s, he said, “[Social Security] is a failed system, broken and bankrupt.” Korbey said that his proposed changes could hurt retirees but added that, “Our constituents aren’t just senior citizens.”
- Tom Leppert, head of the Social Security Administration transition team, has advocated privatizing Social Security, increasing the retirement age (including tax breaks for those who retire later), encouraging private savings accounts, and removing limits on retirement contributions. Historically, his proposed changes to Social Security have been focused on those 55 and younger.
- Rep. Tom Price (R-Ga.), nominated for secretary of the Department of Health and Human Services, has advocated for cuts to Medicare and Social Security, including means testing, and for privatization. He may not have power over the SSA, but he has been nominated for a cabinet position, which gives him influence at the highest levels.
With these team members, the writing seems to be on the wall. Look for Trump to push to privatize Social Security, at least for those who aren’t retiring soon.
3. What strategies might the administration consider in the short-, mid- and long-term to fix Social Security? President George W. Bush spent a lot of political capital seeking to privatize Social Security, and some suggest it cost him the Congressional majority. One would expect Trump to be more pragmatic in his approach, but he has repeatedly proven to be unpredictable.
Trump may seek privatization only for those younger than 40 or 50, with additional means testing -- as Social Security is already earnings mean-tested -- for those closer to retirement.
Although no one has a crystal ball, these educated guesses from a retirement planning expert may provide food for thought and potential talking points for use in client conversations.
This story is part of a 30-day series on Social Security.
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