Finance
Under 65 and over $500,000 saved? Learn how Trump's policies affect your retirement
President-elect Donald Trump has stated some policies that he wants to implement in his second term that could affect how much you’ll need to retire.
Knowing what the future holds in store is a lucky guess at best for most of us. With all the uncertainties it’s important to build up savings to weather any storms that lie ahead, especially for retirement.
President-elect Trump has laid out several policies that he wants to implement from the moment he takes office on January 20, 2025. Several of those are likely to have economic impacts that could on the one hand benefit certain retirees and on other require seniors to plan on saving more before retiring.
Under 65 and over $500,000 saved? Learn how Trump’s policies affect your retirement
Depending on where you retire, the amount that you are likely to need varies widely but according to a Northwestern Mutual study, American workers estimate that they will need $1.46 million to retire comfortably. The average age most people expect to keep working until is 65 and the group approaching that age is quite a way off the mark for that target. The most recent data from the Federal Reserve Bank of San Francisco says that those aged 55-64 have on average $537,560 saved up for retirement.
Tax exemption for Social Security benefits
Trump said during the 2024 campaign that he wants to eliminate federal taxes on Social Security benefits. Depending on income and tax brackets, recipients could save between $1,500 and $4,000 annually.
While that is a significant amount of money, it would come at a cost in the not so distant future according to a study by the Committee for a Responsible Federal Budget. The nonpartisan public policy group that tackles fiscal issues forecasts the program’s trust funds would be depleted by 2031, three years earlier than originally projected. Additionally, monthly Social Security payments would be 33% smaller in 2035 if Trump’s promises were implemented.
Trump tax policy could boost investments
However, for those that have their retirement savings in investments, other proposals may help boost how much they have. Trump’s tax cuts from his first term expire in 2025 and he as well as his Republican colleagues in Congress will most likely extend them, especially since they control both chambers.
He also wants to cut the corporate tax rate once again, this time from 21% down to 15%. The two proposals could help push up the value of stocks. However, they would also increase the federal deficit as the tax intake would be reduced.
Trump policies likely to increase inflation
Trump says that he wants to raise tariffs across the board, not only to force companies to manufacture products domestically but also to raise revenue. However, doing so is expected to increase inflation as it is basically a sales tax on things the US imports so American consumers will bear the brunt of the cost.
Not to mention that other countries will likely retaliate with their own tariffs of US goods, hurting US exports.
Further inflationary pressure could be placed on the US economy if Trump follows through with his plans for “the biggest deportation in US history.” This would result in labor shortages in several sectors, which in turn would lead to higher wages to fill those vacancies.
Experts on the subject say that the Republican’s immigration policy could cost the country billions of dollars. US GDP could shrink between $1.1 trillion and $1.7 trillion according to estimates by the American Immigration Council.
Get your game on! Whether you’re into NFL touchdowns, NBA buzzer-beaters, world-class soccer goals, or MLB home runs, our app has it all.
Dive into live coverage, expert insights, breaking news, exclusive videos, and more – plus, stay updated on the latest in current affairs and entertainment. Download now for all-access coverage, right at your fingertips – anytime, anywhere.