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While the election is still a few months away and there aren’t any guarantees, Donald Trump is very much in the running for president. With very little time left, Trump is still making his case to the American public about why he should be reelected as president.
Among the people he must convince are those who are about to retire. This includes millions of baby boomers, all of whom are in their 60s or 70s now. For some, the choice to vote for or against Trump is going to be more based on the policies and promises he makes than it is the political party backing him.
Those who’ve already retired — as well as those who are planning to retire next year — would do well to keep an eye on what Trump is saying. After all, some of his policies could affect their nest egg or ability to retire comfortably when they want to.
“I don’t predict major impacts to retirees based solely on who wins the presidency,” said Bill Boersma, a financial planning expert and life insurance professional with OC Consulting Group. “However, proposed policy changes around taxes and healthcare costs are worth monitoring.”
So, what are some changes that could affect retirees’ plans in the near future if Donald Trump becomes president?
Policy Changes Might Have More of a Long-Term Impact
If Trump wins the election, he won’t be inaugurated as president until January 2025. This means it’ll be too late for him to sign new legislation or implement new policies that will impact social programs — like Social Security or Medicare — next year.
But there could still be a longer-term impact.
Retirement Age
Earlier this year, the Republican Study Committee put out a budget proposal for the 2025 fiscal year. This proposal includes significant changes to Social Security, which could heavily impact the millions of people who receive benefits.
In particular, the Committee’s proposal could result in changes to the program that could hurt soon-to-be retirees’ plans. This includes a raised full retirement age (FRA).
The FRA is when someone becomes eligible for the maximum — or full — Social Security benefits. Currently, the FRA is 66 or 67, depending on date of birth. The Committee intends to raise it to 69, which could cause many people to have to postpone their retirement plans. It would also cut the overall benefits amount by anywhere from 12.5% to 14.3% by the time it comes into effect, according to the Center for American Progress. This is a loss of thousands of dollars in income each year.
Spending on Social Security and Medicare
The Republican party has also advocated for cutting Social Security funding — and Medicare funding — in the first place. Here are the some possible effects, per a recent White House briefing:
- There have been calls for more than $1.5 trillion in budget cuts for Social Security, which also includes increasing the FRA and reducing disability benefits.
- Medicare costs could increase for seniors, and the $2,000 out-of-pocket maximum would be repealed.
Meanwhile, the Committee for a Responsible Federal Budget estimates that Trump’s proposal to get rid of Social Security taxes could cause the program to run out of money two years sooner than previously estimated — from 2035 to 2033. Medicare could also face insolvency six months sooner than expected.
Without any changes made to the system, the Social Security Board of Trustees predicts that, by 2035, there will only be enough to pay 75% of the total scheduled benefits to Social Security recipients — regardless of age, demographic or otherwise.
Again, these changes might not come into effect until after 2025, and they are dependent on these proposals coming into effect. But for those who are thinking about retiring soon, they’re still worth knowing about. After all, knowledge is power — the more you know, the better prepared you’ll be to adjust your retirement plans accordingly.
Other Proposed Policy Changes Could Be Beneficial or Not
As Boersma pointed out, it’s quite possible that Trump’s proposed policies could play a role in retirees’ — and soon-to-be retirees’ — plans.
“For example, proposed corporate tax cuts could boost stock prices and retirement account balances,” he said. “Proposed changes to tax-advantaged accounts like 401(k) [plans] concern me, and I advise lobbying against them.”
He also noted that, regardless of who’s in office, healthcare costs will probably continue to rise.
In 2023, Fidelity Investments released its Retiree Health Care Cost Estimate. This report estimated that the average 65-year-old retiree spends around $157,500 in medical expenses and healthcare throughout their retirement. This isn’t a major change from the year before, but retirees still have to cover significant health-related expenses.
“Reviewing options to mitigate these costs is prudent,” said Boersma.
Options are out there. For those who started earlier, opening a health savings account (HSA) can provide some serious tax benefits — both on contributions and withdrawals for medically qualifying expenses. Older individuals — those 65 and up — can withdraw from these accounts without taxes, even if they aren’t using the money for medical expenses.
Other options may include getting a long-term care policy, which could save the soon-to-be retiree thousands of dollars, or a life insurance plan — potentially best for younger individuals.
Retirees Should Review Their Plans and Make Necessary Adjustments
Even if the president doesn’t have as much of a direct impact on soon-to-be retirees, it’s still wise to look over those plans and make any necessary changes to set oneself up for financial success.
“My top advice is simple. Max out tax-advantaged retirement accounts like 401(k) [plans] and IRAs. Pay down high-interest debt. Review expenses and look for waste,” said Boersma. “Meet with a financial advisor … to develop a comprehensive retirement income plan based on your needs and risk tolerance. Make adjustments as needed to policy changes, but avoid reactionary changes, which often prove unwise.”
Bottom Line
If Donald Trump is elected, there could be long-term changes for future retirees — like budget cuts in the Social Security or Medicare programs. But it’s unlikely that these changes will take place in 2025.
Still, no matter who becomes the next president, being prepared is really the best option.
“A financially prepared retiree worried mainly about maintaining their standard of living will rest easier, regardless of election outcomes,” said Boersma. “With proper planning and prudent adjustments, a comfortable retirement should remain within reach for most.”
Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. For more coverage on this topic, please check out I’m a Financial Planner: Here’s What a Kamala Harris Presidency Would Mean If You Plan To Retire in 2025.
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