Social Security

How Donald Trump could get Social Security for his son Barron, but this has nothing to do with Trump

Recently I wrote a blog on HumbleDollar.com about the growing trend for older Americans having young children. But there is even more to that than I thought about.

As you may know, Social Security is far more than retirement benefits. But how much more comes as a surprise to many. I question that Social Security was originally intended to subsidize life choices, but nevertheless that is the case.

Survivor or disability benefits is one thing, but that’s not what this is about. And keep in mind that everyone pays the same percentage of income into the program regardless of family status while benefits increase substantially with family status.

The 72-year-old tycoon-turned-president is eligible for benefits based on his earnings record as a real estate mogul in New York. And because 12-year-old Barron is underage, he would also qualify for Social Security payments on his dad’s record — 50 percent of his father’s benefit — until he reaches 18 or is out of high school. The maximum monthly check for a worker first claiming at full retirement age, is $2,788 in 2018. Trump’s wife, Melania, 48, may be able to collect benefits because she is caring for Barron, though those payments to her will stop once he turns 16. When she turns 62, she can start collecting spousal benefits.

Source: How Donald Trump could get Social Security for his son Barron

“In 2017, we distributed an average of $2.6 billion each month to benefit about 4.2 million children because one or both of their parents are disabled, retired, or deceased. Those dollars help to provide the necessities of life for family members and help make it possible for those children to complete high school. When a parent becomes disabled or dies, Social Security benefits help stabilize the family’s financial future. Source: SS.gov

Keep in mind we are not talking about disabled people or even poor people. We are talking about individuals who had children later in life and decided to retire and/or begin their Social Security benefits.

“When you start receiving Social Security retirement benefits, some members of your family may also qualify to receive benefits on your record.

If they qualify, your spouse or child may receive a monthly payment of up to one-half of your full retirement benefit amount. These payments will not decrease your retirement benefit. In fact, the value of the benefits your family may receive, added to your own, may help you decide if taking your benefits sooner may be more advantageous.

Benefits paid to your spouse will not decrease your retirement benefit. In fact, the value of the benefits they may receive, added to your own, may help you decide if taking your benefits sooner may be more advantageous.” SSA.gov

There is no question that Social Security is an ingrained, vital safety net for more and more Americans. It’s not going away, there is nothing to replace it and unfortunately with the ongoing decline of pensions in the workplace Americans, in general, have demonstrated their inability or unwillingness to plan for their own financial future.

We are at a crossroad. As Social Security’s fiscal status declines we are faced with making it solvent beyond 2034. And then we are faced with a key question. Do we simply give up on individual responsibility and increase Social Security benefits to 60-70% of pre-retirement income and figure out how to pay for that? If so, you are clearly looking at payroll taxes in 20% to 25% range.

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3 replies »

  1. There is more than a little tinge of envy in your article. Donald Trump’s “earned” his Social Security benefit – same as you or me. He paid in his 40 quarters. The formulas applied to him is the same as those applied to you and me, and, for example, my father.

    My father died at age 53 when I was 17, my younger brothers were 14, and 5. My mom collected modest child support benefits. She returned to the workforce and benefit stopped. Later, her surviving spouse’s benefit was reduced because she went back to work for the state and was subject to the Government Pension Offset added in 1983 – 14 years after my father passed away.

    As we have recounted over and over in these blog posts, the Social Security system is not an individual account retirement savings plan – your benefit, my benefit, my mom’s benefit and Donald Trump’s benefit will not be based on what each of us contributed, but what the formulas and code provisions provide.

    Is there some reason why Donald Trump should not receive the benefits that are provided to any other 72 year old with the same earnings record?

    Separately, as you certainly know, whether or not Mr. Trump has claimed Social Security benefits, he has much more than likely paid in dramatically more in taxes (“contributions”) to Social Security than he will ever receive in benefits – even if you engage in the misdirection that his employer’s contribution was not his money (as most of his working career, he has been self employed).

    I am not saying you are envious, but, the article prompts that reaction in other individuals who believe Social Security should start to limit benefits or raise contributions based on ability to pay – migrating it towards a welfare program.

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    • As I said in the title it has nothing to do with Trump. And it has nothing to do with the family situation you described. The issue is a person collecting social security and simply because they have a young child collecting additional benefits.

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  2. RD, you have some very good points in this post.

    There are only a few ways to make up the shortage that is coming.
    Raise payroll taxes, cut benefits, lower colas 1% when inflation is above 3% and lift the maximum income taxed cap to $300,000, are a few of the fixes I have seen being proposed.

    Now is the time to raise the SS payroll tax to 10 percent for employer and employee. We just gave employers one of the biggest income tax rate decrease in history. So now they are in much better shape to cover the additional 3.8 % tax.
    Since a majority of workers do not have the income to save for retirement or chose not to save, for many different reasons; the 3.8 % increase in tax is forced savings that ensures that the SS Trust fund will grow in the near future once all the boomers are gone, around 2050.
    I just wish Congress would do something to fix SS, but many people tell me I am living in a dream world to think Congress will do the right thing on fixing SS.

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