--- title: Killing 401(k) Tax Benefits Could Help Save Social Security, New Research Shows description: New research shows one way to fix Social Security funding problems is to cut 401(k) tax benefits. The move would upend retirement planning. authors: - name: Pete Grieve role: Lead News Reporter url: https://money.com/author/pete-grieve/ bio: Pete Grieve is a personal finance reporter. In his time at Money, Pete has covered everything from car buying to credit cards to the housing market. education: University of Chicago, BA Political Science at_money_since: 2022 articles: 597 covers: - Retirement - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Shopping - Taxes social: - https://twitter.com/pete_grieve - https://linkedin.com/in/pete-grieve-b5aa02138 - https://www.facebook.com/petegrieve4 editors: - name: Brad Tuttle role: Senior Editor url: https://money.com/author/brad-tuttle/ bio: Brad Tuttle is a former senior editor at Money with over 10 years’ experience covering a vast number of personal finance topics, including careers, cars, travel, budgeting, investing, insurance, credit cards, consumer psychology, real estate, banking, and shopping and deals. education: Columbia University School of Journalism, MS at_money_since: 2014 articles: 366 covers: - Retirement - Banking - Business - Career Advice - Credit - Credit Cards - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Pets - Professional Services - Shopping - Taxes - Technology social: - https://twitter.com/bradrtuttle - https://linkedin.com/in/brad-tuttle-834b225 former_staff: true published: '2024-02-14T13:00:51.000Z' modified: '2024-04-17T13:59:50.000Z' section: Retirement tags: - News word_count: 493 canonical: https://money.com/kill-401k-benefits-save-social-security/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Photo-illustration of a dead money plant, being watered by a social security card.](https://img.money.com/2024/02/News-401k-Social-Security.jpg) A new idea for addressing Social Security’s looming funding gap proposes that Congress eliminate tax advantages for [401(k)s](https://money.com/what-is-a-401k-rollover/) to come up with funds to continue paying retirees’ benefits. Ending certain tax preferences for retirement plans could correlate to a $185 billion annual increase in tax revenues, which would cover most of Social Security’s funding shortfall, according to a [brief published by the Center for Retirement Research at Boston College](https://crr.bc.edu/the-case-for-using-subsidies-for-retirement-plans-to-fix-social-security-2/). Social Security is facing a funding gap. If no action is taken, Social Security benefits are at risk of being cut by 20% in 2034 — the projected depletion date for surpluses in Social Security trust funds. While that’s a decade away, Alicia Munnell, management sciences professor and director of the center, says the goal of the research is to spur action from lawmakers who haven’t shown much progress on any other [solutions to fix Social Security](https://money.com/ways-to-fix-social-security/). “The argument usually is over benefit cuts versus tax increases," Munnell says. "This seemed like a way to avoid that debate and break the deadlock." ## Put a gold-backed IRA into your golden years ### Gold IRAs are similar to traditional retirement accounts, but they are backed by investments in gold and other precious metals, such as silver, platinum, and palladium. To get started, click on your state. [Invest in Gold](https://money.com/pr/h28f7d74d02b?ap_referrer=%2Fkill-401k-benefits-save-social-security%2F) ## Repeal 401(k) tax benefits to fund Social Security? Tax benefits for 401(k)s allow you to contribute pre-tax earnings to your account — often with an employer match of a few percent of your salary. Typically, you delay paying any taxes until withdrawal in retirement, when you tend to be in a lower tax bracket. More than a third of working-age Americans have 401(k)-style retirement accounts, according to Census Bureau data. The brief from Boston College's retirement research center supports the argument for repealing 401(k) tax benefits with statistics showing that high earners benefit most from them. "Upper-income taxpayers are more likely to have access to employer-sponsored retirement plans, are more likely to participate in their employer’s plan, and contribute more when they do participate," Munnell and coauthor Andrew Biggs, senior fellow at the American Enterprise Institute, wrote in the brief. The fact that higher-income people benefit more from 401(k) tax benefits has been recognized by both Democrats and Republicans in Washington over the years, but in different contexts. Some Democrats have called to increase 401(k) tax benefits for lower-income people, while there have been Republican pushes to reduce 401(k) tax subsidies. It’s unclear whether the idea of repealing 401(k) tax benefits would be any more appealing to the public than other proposed fixes that are usually unpopular, like raising taxes or increasing the retirement age. The brief authors contend that 401(k) tax benefits do not incentivize Americans to save more for retirement — or at least not by a significant amount, and mainly benefit upper-income people. But many Americans love their 401(k)s and consider them central to their retirement planning. Experts are already concerned that Americans [aren't saving enough for retirement](https://money.com/retirement-savings-shortfall-state-automated-ira/) in accounts like 401(k)s, and eliminating tax benefits could be a further setback. ![](https://s3.consumersadvocate.org/prd/image/image/19305/medium_414558a1-29d4-465e-b5d1-921febc39ed2.png) American Hartford Gold can help you take control of your financial future [Invest in Gold](https://money.com/pr/u1f7b2bc903e?ap_referrer=%2Fkill-401k-benefits-save-social-security%2F) ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/kill-401k-benefits-save-social-security/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Retirement", "item": "https://money.com/retirement/" }, { "@type": "ListItem", "position": 3, "name": "Social Security", "item": "https://money.com/social-security/" }, { "@type": "ListItem", "position": 4, "name": "Killing 401(k) Tax Benefits Could Help Save Social Security, New Research Shows" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/kill-401k-benefits-save-social-security/#webpage", "url": "https://money.com/kill-401k-benefits-save-social-security/", "name": "Killing 401(k) Tax Benefits Could Help Save Social Security, New Research Shows", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2024-02-14T13:00:51.000Z", "mainEntity": { "@id": "https://money.com/kill-401k-benefits-save-social-security/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/kill-401k-benefits-save-social-security/#breadcrumb" }, "dateModified": "2024-04-17T13:59:50.000Z" }, { "@type": "NewsArticle", "headline": "Killing 401(k) Tax Benefits Could Help Save Social Security, New Research Shows", "articleSection": "Retirement", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2024/02/News-401k-Social-Security.jpg", "width": 2990, "height": 1920, "caption": "News-401k-Social-Security" } ], "author": [ { "@type": "Person", "name": "Pete Grieve", "url": "https://money.com/author/pete-grieve/", "@id": "https://money.com/author/pete-grieve/#author", "description": "Pete Grieve is a personal finance reporter. In his time at Money, Pete has covered everything from car buying to credit cards to the housing market.", "image": "https://img.money.com/2023/02/peter.png?w=350&h=430&crop=1", "email": "peter.grieve@money.com", "jobTitle": "Lead News Reporter", "alumniOf": "University of Chicago, BA Political Science", "sameAs": [ "https://twitter.com/pete_grieve", "https://linkedin.com/in/pete-grieve-b5aa02138", "https://www.facebook.com/petegrieve4" ], "worksFor": { "@id": "https://money.com/#organization" } } ], "publisher": "https://money.com/#organization", "datePublished": "2024-02-14T13:00:51.000Z", "description": "New research shows one way to fix Social Security funding problems is to cut 401(k) tax benefits. The move would upend retirement planning.", "abstract": "New research shows one way to fix Social Security funding problems is to cut 401(k) tax benefits. The move would upend retirement planning.", "@id": "https://money.com/kill-401k-benefits-save-social-security/", "inLanguage": "en-US", "dateModified": "2024-04-17T13:59:50.000Z", "editor": [ { "@type": "Person", "name": "Brad Tuttle", "url": "https://money.com/author/brad-tuttle/", "@id": "https://money.com/author/brad-tuttle/#author", "description": "Brad Tuttle is a former senior editor at Money with over 10 years’ experience covering a vast number of personal finance topics, including careers, cars, travel, budgeting, investing, insurance, credit cards, consumer psychology, real estate, banking, and shopping and deals.\r\n\r\n", "image": "https://img.money.com/2014/01/Brad-Tuttle.png?w=226&h=247&crop=1", "alumniOf": "Columbia University School of Journalism, MS", "sameAs": [ "https://twitter.com/bradrtuttle", "https://linkedin.com/in/brad-tuttle-834b225" ] } ], "wordCount": 493, "keywords": [ "News" ], "about": [ { "@type": "Thing", "name": "Retirement", "sameAs": [ "https://en.wikipedia.org/wiki/Retirement" ] }, { "@type": "Thing", "name": "Social Security (United States)", "sameAs": [ "https://en.wikipedia.org/wiki/Social_Security_(United_States)" ] }, { "@type": "Thing", "name": "401(k)", "sameAs": [ "https://en.wikipedia.org/wiki/401(k)" ] } ] } ] } ```