Trump Won the Election: 3 Things Retirees Will Save Money on in 2025
Written by
Kerra Bolton
Edited by
Amber Barkley
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From promising to exempt Social Security from federal taxes to lowering the prices of common prescription medications, President-elect Donald Trump courted retirees during his successful campaign.
Some of Trump’s policy changes could help retirees keep more money in their pockets and less stress on their retirement savings. Here are three things retirees will likely save money on in 2025, since Trump won the election.
Taxes
Trump proposed eliminating taxes on Social Security benefits, which could help retirees with provisional incomes above $25,000 for individuals and $32,000 for couples.
“This change, combined with a potential extension of the 2017 tax cuts, could reduce the tax burden for many retired Americans,” said Yehuda Tropper, the CEO of Beca Life, who works exclusively with seniors.
In addition, Thomas Kluz, managing director of Venture Lab, said proposals to reduce or waive capital gains taxes could save retirees money on their investment income.
“It is also possible to reduce both tax burdens and flexibility in retirement account withdrawals for older adults by increasing the age for RMDs (required minimum distributions) so that withdrawals are not taxed or exempting smaller withdrawals from taxation,” Kluz said.
Kluz explained, “For instance, the recently passed SECURE Act 2.0 increased the RMD age to 73, and the RMD age can be further increased with additional changes.”
Healthcare Costs
Tropper said retirees who participate in Medicare could see a projected average annual savings of $400, because changes to the Inflation Reduction Act will take effect in 2025. Currently, the program includes a $2,000 cap on out-of-pocket Part D drug costs.
“However, these savings could be affected by potential policy modifications under a future Trump administration,” Tropper said.
If the Inflation Reduction Act expands Medicare so that the agency can negotiate drug prices, retirees could also save money.
“It also means early retirees who aren’t yet Medicare eligible could have their premiums reduced under enhanced subsidies under the Affordable Care Act,” Kluz said.
Kluz also said growing access to Medicare Advantage plans with competing price points may bring down cost coverage options.
He explained, “For instance, the Kaiser Family Foundation noted that in 2024, Medicare Advantage premiums averaged $18 per month, far less than traditional Medicare combined with supplemental insurance.”
Social Security
Social Security could be a mixed bag for retirees in 2025.
For example, Tropper said the 2025 Social Security’s cost-of-living (COLA) adjustment of 2.5% is the smallest COLA increase in four years. However, it will add about $50 per month to the average Social Security check.
In addition, Trump promised eliminating federal income taxes on Social Security benefits, which could save higher-income retirees more money, because they are more likely to have a portion of their benefits taxed. Currently, lower-income retirees don’t pay Social Security taxes.
In 2025, 48 states will not tax Social Security benefits. Therefore, retirees living in those states could see Social Security tax cuts at the federal and state levels next year.
However, analysts said that tax breaks for some retirees could come with costs. Eliminating Social Security taxes could reduce the federal program’s revenue by about $1.6 trillion over the next decade, accelerating the possible shortfall in the Social Security and Medicaid trust funds.
“Only about 40% of Social Security recipients pay this tax, because they also have other substantial sources of income,” said Meghna Chakrabarti, host of NPR’s “On Point,” during an episode on the topic. “So, getting rid of the tax would increase the overall income of many seniors, but it could also cost the program its future, because those taxes go into the Social Security Trust Fund.”
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