I’m a Retirement Planner: 7 Ways I Am Guiding Clients Now That Trump Won
Written by
Kerra Bolton
Edited by
Chris Cluff
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President-elect Donald Trump’s second term could ignite questions about how his administration will influence retirement savings. Retirement planners are helping clients navigate new tax policies, market shifts and economic forecasts to guide their clients effectively.
“It’s crucial not to panic and make emotional financial decisions, especially in times of uncertainty,” said Derek Miser, investment advisor and CEO at Miser Wealth Partners. “Also, they must stay informed about any possible policy changes, such as tax adjustments or healthcare reform.”
Here are seven ways financial planners like Miser are guiding their clients now that Trump won.
Aim For a Balanced Strategy
Miser said he advises clients to aim for a balanced retirement savings strategy without becoming overwhelmed.
“Focus on tax legislation affecting retirees on how they save and access their savings,” he said. “These will be important when deciding to save your money and what vehicles to use.”
Ask Questions
President Joe Biden and President-elect Trump had vastly different approaches to economic policies that could affect your retirement savings. For example, Biden’s tax policy focused on increasing taxes for high-income earners and corporations, while Trump emphasized extending and expanding tax cuts to stimulate economic growth.
“One question a retiree should ask their financial advisor is how any policy changes could impact their income and tax liabilities,” Miser said. “They need to understand the possible effects of tax policy shifts, Social Security adjustments and changes to retirement account regulations. Working with an advisory team, either tax or legal counsel, should be part of their wealth management team.”
Miser said another question they should consider is how they should protect their retirement assets from inflation or rising interest rates.
“Inflation and rising rates can erode the purchasing power of fixed-income investments, so adjustments may be necessary to protect long-term savings,” Miser said. “They might want to consider investments that offer growth or automatic cost-of-living adjustments that are guaranteed. These guarantees often exist in fixed-indexed annuities, and act as a hedge against rising prices in retirement.”
Review Your Asset Allocation
Now is an excellent time to review your asset allocation, especially if you’re nearing or in retirement.
“Consider reducing exposure to highly volatile stocks or bonds sensitive to rate hikes and inflationary pressures,” Miser said. “Conversely, you might look into inflation-protected securities, like Treasury Inflation-Protected Securities (TIPS).”
In addition, the Federal Reserve has raised rates in recent years to combat inflation, and further increases could continue.
“This makes bonds and other fixed-income investments less attractive, while savings accounts may see higher yields,” Miser said. “Retirees may need to adjust their portfolios to include more inflation-protected or dividend-paying assets.”
Max Out Retirement Contributions
Increase contributions to your employer-sponsored retirement plan if you haven’t reached this year’s limit.
The contribution limit for a 401(k) is $23,000, with an additional $7,500 allowed for people over 50.
Melissa Pavone, founder at Mindful Financial Partners, said, “Contributions to a traditional 401(k) reduce taxable income and lower your tax bill.”
In addition, Pavone recommended the self-employed consider contributing to a Simplified Employee Pension (SEP) IRA or solo 401(k), especially if it was a good financial year.
Build Liquidity
Miser suggested retirees have enough liquidity in their savings to cover unexpected expenses.
“Having cash set aside can prevent you from having to sell investments during a market downturn,” he said. “Finally, consider delaying Social Security benefits as it can result in a higher monthly payment, especially if there are changes in the cost-of-living adjustments (COLA) or other government policies.”
Open a Health Savings Account
Medicare and healthcare costs are significant concerns for retirees, Miser said.
“If the new administration pushes for changes to Medicare or healthcare subsidies, this could impact out-of-pocket costs or the structure of healthcare access,” Miser said. “Retirees should look into healthcare plans, including Medigap policies, to ensure they’re adequately prepared for potential changes. Eligible people can also open a health savings account (HSA), which offers triple tax advantages.”
Stay Adaptable
Miser said that while policy changes can certainly impact retirement plans, proactive steps, informed decision-making and staying adaptable are vital to navigating uncertainty.
“A well-structured retirement plan that accounts for tax, investment, healthcare, Medicare, legal documentation and inflation risks can help ensure your financial future remains secure, regardless of the political climate,” Miser said.
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