Impulsive measures put social security, the stock market and the economy themselves at risk.
By attacking Social Security, crashing stock markets, and imposing unreasonable tariffs that will increase unemployment and prices, Trump has targeted the retirement safety of millions of American families.
Attacks on social security are shameful. The initial attempt was proven by widely debunked claims that 20 million people are receiving benefits. While there is no evidence of “waste, fraud or abuse” and existing customer service challenges, the agency announced plans to lay off 7,000 employees and close six regional offices; there are more cuts. As a result, millions of Americans will find it difficult to get what they have gained in their lifetime.
Even more worrying is that Doge plans to rebuild the code of the Social Security computer within a few months, and experts agree that it will take years to safely rewrite the code. Indeed, like many government agencies, the social security system contains code written in COBOL, a programming language created in the 1950s. It needs to be updated, but it is difficult to fix the bike while riding it. The institution will never get all the resources needed to build a completely new system and then migrate files. Now may be the time to start a plan like this, but please take the time to do it correctly. Hurry work will lead to the failure of the cascade, people gain the wrong benefits, wait for a long time to get benefits, or have no benefits at all.
The collapsed Social Security computer system will be disastrous, with more than 13 million Americans relying solely on Social Security on retirement income. The fact that they may end up receiving the promised amount cannot compensate for the damage that will be done in the near term.
The damage to retirement safety goes beyond the attack on the Social Security Agency. Now, many private sector workers and most new retirees rely on assets in their 401(k) plans (and files for individual retirement accounts) to supplement their Social Security benefits. The Federal Reserve Consumer Financial Survey Among retired families in 2022, the holdings in these accounts are comprehensive, which is the latest data. These balances are moderate for everyone except for the highest income of one fifth. Importantly, they invest primarily in stocks and therefore rely heavily on the performance of the stock market. The index fell more than 10% after Trump’s tariff announcement. If the market continues to save, retirement will be at risk.
Finally, Trump’s tariff policy has the potential to hurt the wider economy by increasing layoffs and prices. To some extent, workers are unemployed, they will not be able to contribute to the 401(k) and may be forced to withdraw their assets to support themselves. To some extent, tariffs lead to higher prices, and even those who stay employed will find that they need to spend more money to maintain their living standards, allowing them to save. In addition, inflation will erode the value of existing assets.
The next update to the Center’s National Retirement Risk Index, which measures the percentage of today’s working families who are unable to maintain their pension levels today, will be based on the Fed’s Consumer Financial Survey 2025. In 2022, this is good news mainly due to the appreciation of housing prices (see Figure 1). Only 39% of working families are expected to be at risk. Based on the current trajectory of the economy, the 2025 results are likely to indicate that this is the level of growth seen during a Great Recession, with more than half of households in danger when they retire.
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