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4 Ways This Could Impact Your Social Security Benefit

Updated: 06-11-2024, 09.36 AM

Pollsters predict a Republican sweep of the U.S. Senate in the upcoming election, leaving older adults wondering how the partisan leadership change could affect their Social Security benefits.

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Historically, Republicans have advocated reducing federal spending, including on programs like Social Security and Medicare. However, Social Security is too costly to sustain and too popular with voters to end completely.

“Both parties have spent decades scared to challenge the politics of addressing Social Security’s deteriorating financial state,” said Dustin Siggins, a political analyst and co-founder of Proven Media Solutions, a PR firm. “That is unlikely to change no matter who leads the Senate.”

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Nevertheless, if the pollsters are right, the Senate may turn Republican. Here are three ways this could impact your Social Security benefits.

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Millions of older Americans could see a 21% reduction in their Social Security benefits in 2034 if federal lawmakers don’t act quickly. However, Congressional lawmakers are at odds about what to do, according to The Hill.

Sen. Rick Scott (R-FL), a leading contender to lead the Senate if Republicans win it, proposed in 2022 a plan to end all federal government programs, including Social Security and Medicaid, every five years unless Congress reauthorizes them, reports CNN.

However, Senate Republican leaders rejected Scott’s proposal, according to NBC, and another plan introduced by conservative House Republicans that would increase the retirement age and decrease benefit levels. Scott even modified his plan to exclude Social Security and Medicare in response to criticism, Rescue America shared.

“The truth is, they are not wrong in calling out the need for changes to these programs to address the looming solvency crisis,” said Chris Orestis, the president of The Retirement Genius.

Orestis explained, “The most likely scenario to address the pending solvency problems for Social Security is a combination of raising taxes, increasing qualifying retirement ages, and reducing, if not eliminating, benefits for people of high incomes/net worth.”

Republicans are adamant that they wouldn’t immediately raise the full retirement age if they win control of the Senate.

“The more likely approach would be to issue a reduced benefit and/or increase the retirement age schedule targeted at a point in the future that would impact people not yet on the program,” Orestis said.

You really can’t take benefits away from people or change qualifying age formulas for those already on the program. But it is more manageable to reduce benefit levels in the future and/or increase the (retirement) ages for people who are yet to go on Social Security.”

Increasing the age at which individuals could claim full benefits would save the government money and enhance the program’s long-term viability.

“Advocates of this plan argue that it reflects the increasing life expectancy and workplace participation,” said Christopher Stroup, founder and president of Silicon Beach Planning.

Stroup said there were reports that Republicans may reduce payroll taxes.

“This reduction in payroll taxes would increase the take-home pay for employees, which provide immediate relief,” Stroup said. “However, removing this critical funding source for Social Security would heighten the program’s long-term funding issues.”

Stroup explained, “If enacted, taxpayers would face short-term gains only to face uncertainties regarding the sustainability of their future Social Security benefits.”

Wayne Winegarden, an economist at the Pacific Research Institute, said Republicans could also change the cost-of-living calculations that are “generally acknowledged as being overly generous.”

While the government would save money, retirees’ Social Security checks wouldn’t be enough to keep pace with rising living costs.

Nevertheless, Winegarden said a Republican Senate coupled with a Democrat House could create the opportunity for a bipartisan attempt at Social Security reform.

“The specific options chosen (to change Social Security benefits) would be the subject of intense negotiations,” Winegarden said.

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This article originally appeared on GOBankingRates.com: The Senate May Turn Republican: 4 Ways This Could Impact Your Social Security Benefit