An important part of your retirement planning is to understand the potential changes in Social Security and retirement plans that politicians advocate, then vote and act accordingly.
So, let's examine the leading presidential candidates' views on these topics. We'll look first for positions posted on each candidate's website. When no such positions are posted, we'll look at recent quotes and interviews in the media or from the debates that may be more spontaneous, often from the helpful website OnTheIssues.
The candidates are listed in order of a recent poll on their ratings.
- Opposes privatization of Social Security, opposes raising the retirement age and opposes reducing annual cost-of-living adjustments (COLA).
- Opposes closing the long-term shortfall with moves that affect the middle class, whether through benefit reductions or tax increases.
- Would expand Social Security for those who need it most, including widows and women who took significant time out of the workforce to care for children or aging parents.
- Would increase taxes on the wealthiest Americans by raising the cap on Social Security taxable income and taxing other income not currently taken into account by the Social Security system.
Clinton's website doesn't have any proposals for retirement plans, although she has been quoted as supporting Obama's plan to require retirement advisors to act as fiduciaries.
From Bernie Sanders' website:
- Opposes any reductions to Social Security benefits, opposes increasing the retirement age and opposes privatization.
- Would strengthen Social Security funding by raising the system's taxable wage base to $250,000 (it will be $118,500 in 2016).
Sanders' website doesn't list any positions on retirement plans, and a quick media search turned up no quotes or interviews.
Only the websites of Marco Rubio and Rand Paul contain positions on Social Security:
- Rubio would make no changes for those in retirement or near retirement. He would gradually increase the retirement age to keep up with changes in life expectancy. He would reduce the rate of benefit growth for upper-income seniors while making the program stronger for low-income seniors.
- Paul would raise the retirement age gradually for younger workers and by means-testing yearly earnings. Paul has previously been quoted as allowing workers to opt out of Social Security. In 2010, he called Social Security a Ponzi scheme.
The websites of the following candidates didn't post positions on Social Security or retirement plans: Donald Trump, Ben Carson, Jeb Bush, Ted Cruz and Carly Fiorina. All of the information below comes from media quotes and interviews, listed in the order of a recent poll on the candidates' ratings.
- Trump opposes cuts to Social Security and opposes raising the retirement age.
- Carson has not been quoted much on his Social Security positions, although he appears to favor raising the retirement age.
- Cruz would raise the retirement age and cap increases in the cost-of-living adjustment. He also advocates allowing workers to save up to $25,000 per year in Universal Savings Accounts (USA).
- Bush would raise Social Security's retirement age to 68 or 70. He would also encourage setting up starter 401(k) accounts that would allow workers and businesses to access a single retirement plan to reduce complexity.
- There don't seem to be recent quotes from John Kasich on Social Security. But one of his more memorable statements about Social Security comes from his 2006 book, "Stand for Something: The Battle for America's Soul," where he wrote that more 18-year-olds believe they stand a better chance of seeing a UFO than a Social Security check.
- Fiorina is keeping her views on Social Security secret until she's president. She thinks the federal government shouldn't get more involved in helping workers set up retirement plans.
It's no surprise to see clear differences between the two parties' candidates. Democrats oppose benefit cuts and would strengthen Social Security through increasing payroll taxes. Many of the Republican candidates would raise the retirement age and reduce the growth of benefits or the COLA. None of the Republican candidates have mentioned potential changes to Social Security taxes, although it's probably safe to say they would be opposed to raising taxes.
None of the candidates' proposals are sufficient to fix Social Security's long-term funding deficit, which most likely won't be closed by either tax increases or benefit reductions alone. For example, raising the retirement age won't close the entire long-term deficit by itself. To close the deficit, it will most likely take a combination of tax increases and benefit reductions.
Also note that increasing the retirement age will significantly reduce lifetime benefits for lower-income workers. That's because they haven't made the gains in life expectancies in recent decades that higher-income workers have.
By the way, Social Security benefits are already means-tested in a back-door way: The higher a retiree's income, the larger the portion of their Social Security benefits that are subject to income taxes.
Regarding the challenge that nearly half of all workers don't have access to retirement plans at work or have minimal retirement savings, there don't appear to be any serious proposals other than Cruz's support for the USA plan and Bush's vague proposal for a starter 401(k) plan. Sanders would increase Social Security benefits to address shortfalls in retirement savings.
Stay tuned as the presidential campaign heats up and the candidates continue to refine their positions about Social Security and retirement plans.