The hidden cost of tax-free Social Security benefits

Everybody is excited about the tax elimination on Social Security benefits because, let’s be real, who doesn’t want to keep more of their retirement money? But there is a problem. This major change Trump wants to make can seriously impact the future of retirement programs in America.

Right now, retirees pay taxes, but it is not like this money just disappears. No. The money goes straight into special accounts called “trust funds” that help pay for Social Security and Medicare programs. This is how all retirement programs are running. They all need money from somewhere, and generally, the money comes from taxes.

Another thing Trump suggested is eliminating the tax on tips. This will surely help workers in the service industry, but at the same time less money will go into trust funds, and this will speed up the depletion even more.

According to Chris Orestis, president of Retirement Genius, “It takes money out of the tax coffers.” While tax-free benefits may feel nice in the near term, they might jeopardize the long-term viability of Social Security and Medicare.

It’s easy to see that Trump’s second term brings with it real changes to the lives of American retirees. A lot of great opportunities, but also a lot of challenges. The only thing that remains true is that we should adapt to the new landscape and make the most of it.

Also, there is this important question that many people ask themselves: Is the financial future of retirees safe? What do you think about this? Tell us in the comments section! Are these changes good?

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You should also read: 7 Ways to Reduce Taxes on Your Withdrawals