Retirement Social Security

New Trump Plan Could Cut Your Social Security — What Retirees Must Know Now

A look at how the new Trump plan could strain Social Security's funding and what practical steps retirees can take to stay protected.

By David Maina

Edited by Laura Hohenstein

Updated Dec. 3, 2025

Social Security is entering a new period of uncertainty, and the latest proposals from Trump have raised fresh concerns about future benefits and the long-term health of the trust fund. Even small policy shifts can affect monthly checks, which is why many retirees are paying close attention.

In the sections ahead, you'll see the key risks, what the proposals might change, and the smart money moves for seniors that can help you stay prepared.

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Eliminating income tax on Social Security benefits

Today, up to 85% of your Social Security income can be taxed if you earn above certain levels. For example, a single filer with more than $34,000 in combined income may pay tax on most of their benefit.

Trump has repeatedly said he wants to remove this tax. During rallies and interviews, he stated that "seniors should not pay taxes on Social Security," and made this idea a major talking point.

However, the final tax package he signed in July 2025, the One Big Beautiful Bill Act, did not repeal the benefit tax outright. Instead, it created a much larger standard deduction for older taxpayers, which reduces how much of their benefit is taxed without fully eliminating the tax itself.

This policy matters because those taxes help fund the program. Social Security now receives roughly $50 billion each year from taxes on benefits. According to the Committee for a Responsible Federal Budget (CRFB), removing the tax outright would pull about $950 billion from Social Security over the next decade.

The proposal offers immediate appeal to retirees who want to keep more of their checks, but it also creates long-term questions about how the program would make up for the lost revenue.

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Ending taxes on overtime and tips

Another part of Trump's plan targets payroll taxes. He has pushed the idea of "no tax on tips, no tax on overtime," which would exempt those earnings from the Social Security payroll tax.

Since payroll taxes supply the vast majority of Social Security's funding, even small exemptions have a noticeable impact.

The CRFB estimates that cutting payroll taxes on tips and overtime would cost about $900 billion over ten years.

The new tax law already includes some of these ideas in the form of temporary deductions and exemptions through 2028, which means the trust funds will collect less money during those years.

Boost your retirement savings

The news above can feel unsettling, but you don't need to panic. There are practical steps you can take now to strengthen your own finances.

For instance, you can start by reviewing your monthly expenses and trimming areas that no longer serve you. Even modest changes free up money that can be redirected into your 401(k) or IRA.

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Delay retirement or work longer if you can

Working longer helps in two ways. It can delay the need to draw down your savings, and it can increase your future Social Security benefit.

Even if you don't want a full-time job, part-time work, consulting, or gig jobs can steady your cash flow. Extra income later in life protects your savings and supports a stronger Social Security check in the years ahead.

Diversify your income streams

Relying only on Social Security can leave your budget vulnerable, especially in years when costs rise faster than benefits. That's why you need to build a mix of income sources so one check doesn't carry the full load.

You might draw from a pension, tap retirement accounts, work part-time, rent out a room or property, or earn dividends and interest from investments. The goal is to spread your risk so you're not exposed if one source falls short.

Pay down debt

Credit cards and expensive loans can drain money that could support your daily expenses or savings goals. Every dollar of debt you eliminate removes future interest costs, which strengthens your cash flow.

Retirees without debt often have more flexibility during tight periods and more room to adjust when living costs rise. As you get older, it also becomes more important to avoid taking on new debt, since it can chip away at long-term financial security.

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Plan your Social Security claim with care

Even if future benefits seem uncertain, the timing of your claim still matters. If you delay from 62 to 67, your monthly check rises permanently, and waiting past 67 increases it even more.

Run the numbers before you decide. In many cases, claiming later gives you a stronger monthly benefit and more room in your long-term budget.

Check and rebalance your investments

Review your portfolio to ensure it matches your risk tolerance and retirement timeline. Many advisors suggest shifting toward steadier options, like bonds, high-quality debt funds, or dividend-paying stocks, as you move through your 70s. This helps protect you from sharp market swings that could hit your savings at the wrong time.

Bottom line

With uncertainty ahead, it helps to review your retirement plan as if future benefits could change. Strengthening your savings, reducing debt, and looking for small ways to boost or steady your income can give you more control.

In the end, the future of Social Security will be decided by policymakers, but your financial security is in your hands.

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