social security

Regardless of who wins the election, Social Security will surely remain a hot button issue. The program currently pays out more than it takes in, and this trend is likely to continue. The Social Security trust fund was projected to run out in 2035, at which point about 79% of benefits would be payable.[1] However, that projection was made before the pandemic and increased unemployment hit. President Trump and Presidential Candidate Joe Biden have different ideas for how to change the program, and the outcome of the election could affect Social Security.

The Financial State of Social Security

The Social Security trust fund was expected to run out by 2035 before the pandemic, and now, with record unemployment, it could run out faster.[2] However, it’s not likely that the program is ever going away. We could see changes to how the program distributes benefits and is financed during our lifetime, no matter who is president. Millions of Americans rely on Social Security for income in retirement, so it’s no surprise that it’s a high-priority issue for many voters. In a recent poll, 54% of respondents said protecting Social Security was among their top priorities for this election[3].

Potential Changes to the Program

Trump and Biden have different ideas for how to deal with the Social Security program’s financial state: Biden advocates applying the payroll tax to earnings over $400,000 in order to keep the program in full effect. Right now, the payroll tax only applies to wages of up to $137,700.[4] Biden’s plan creates a “donut hole” where wages between $137,700 and $400,000 would not be subject to the payroll tax at first. Over time, the maximum taxable amount of $137,700 would increase, until wages of any amount are subject to the payroll tax.[5] Meanwhile, President Trump recently signed an executive order to temporarily defer collection of payroll taxes for Americans making less than $100,000 through the end of the year. He has said that he wants the deferred taxes forgiven if he is reelected. Trump’s larger plan is to eliminate the Social Security payroll tax altogether, and instead fund the program through income taxes[6]. He has also proposed adding a disability benefit review to the Social Security disability program, which could potentially result in some Americans no longer receiving disability benefits, which then creates a smaller financial burden on the program.[7]

As for how benefits are distributed, Biden suggested increasing payments for individuals who have been receiving benefits for at least 20 years. He wants to institute a minimum benefit so that everyone who has worked for at least 30 years would be guaranteed a benefit of at least 125% of the federal poverty level and an increased benefit for surviving spouses of about 20%[8].

The Bottom Line

Regardless of what changes are made in the next few years, we can help you create a plan to maximize your benefits and help you stay on top of how changes may affect you. The right time to claim your Social Security depends on your individual situation. You might be wondering if you should claim Social Security early due to financial hardship, if your spouse should claim their own benefit or a spousal benefit worth half of yours, or if your benefit could be reduced if you’re still working. Sign up for a complimentary financial review so we can discuss how your Social Security benefit fits into your overall retirement plan and additional options for creating lifetime income.

[1] https://www.cnbc.com/2020/08/18/heres-how-joe-biden-plans-to-change-social-security-if-elected-president.html

[2] https://www.cnbc.com/2020/07/07/social-security-funds-at-risk-due-to-pandemic-what-that-means-for-you.html

[3] https://www.cnbc.com/2020/08/19/preventing-social-security-benefit-cuts-is-a-top-priority-in-2020-election.html

[4] https://www.cnbc.com/2020/08/18/heres-how-joe-biden-plans-to-change-social-security-if-elected-president.html

[5] https://www.fool.com/retirement/2020/08/16/4-social-security-changes-joe-biden-wants-to-make/

[6] https://www.marketwatch.com/story/trumps-idea-on-changing-social-security-funding-has-the-potential-to-break-an-impasse-on-much-needed-reforms-2020-09-09

[7] https://www.cnbc.com/2020/02/12/trump-budget-makes-it-harder-to-get-social-security-disability.html

[8] https://www.cnbc.com/2020/08/18/heres-how-joe-biden-plans-to-change-social-security-if-elected-president.html

The commentary on this blog reflects the personal opinions, viewpoints and analyses of BML Wealth Management’s employees providing such comments, and should not be regarded as a description of advisory services provided by Cooper Financial Group. The views reflected in the commentary are subject to change at any time without notice. Nothing on this blog constitutes investment advice. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance is no guarantee of future returns.

Investment Advisory services are offered through Cooper Financial Group, an SEC Registered Investment Advisory firm. All Insurance Services are offered through BML Wealth & Insurance Services. California Insurance License #0M15550. BML Wealth Management & Cooper Financial Group are not affiliated.

We do not provide tax or legal advice, all individuals are encouraged to seek guidance from qualified professionals regarding their personal situation. Any references to protection benefits or steady and reliable income streams in this guide refer only to fixed insurance products. They do not refer, in any way, to securities or investment advisory products. Annuity guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Annuities are insurance products that may be subject to fees, surrender charges and holding periods which vary by insurance company. Annuities are not FDIC insured. Indices mentioned are unmanaged and cannot be invested into directly


The commentary on this blog reflects the personal opinions, viewpoints, and analyses of BML Wealth Management’s employees providing such comments and should not be regarded as a description of advisory services provided by West Wealth Group, LLC. The views reflected in the commentary are subject to change at any time without notice. Nothing on this blog constitutes investment advice. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance is no guarantee of future returns.

Investment advisory services through West Wealth Group, LLC, an SEC Registered Investment Adviser. BML Wealth Management and West Wealth Group, LLC are affiliated entities. Insurance Services are offered through BML Wealth & Insurance Services, California Insurance License #0M15550.

We do not provide tax or legal advice. All individuals are encouraged to seek guidance from qualified professionals regarding their personal situation. Any references to protection benefits or steady and reliable income streams in this guide refer only to fixed insurance products. They do not refer, in any way, to securities or investment advisory products.