3 Ways Trump’s Presidency Could Affect How Gen X Plans for Retirement
Written by
Vance Cariaga
Edited by
Cory Dudak
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With the oldest Gen Xers turning 60 this year, they no longer have the luxury of viewing retirement as something in the distant future. Many will qualify for Social Security retirement benefits during the next four years — which means they have a keen interest in how President Donald Trump’s policies might impact their retirements.
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Here’s a look at three ways Trump’s presidency could affect how Gen X plans for retirement.
Taxes on Social Security Benefits
During the 2024 presidential campaign, Trump floated the idea of eliminating federal income taxes on Social Security benefits. This could have a dual effect on Gen Xers in retirement, according to Melissa Murphy Pavone, CFP, CDFA, founder of Mindful Financial Partners, which specializes in personalized, holistic financial planning that aims to empower clients to navigate life’s transitions (including retirement).
“While this change could provide immediate financial relief, it may also accelerate the insolvency of the Social Security Trust Fund, potentially leading to future benefit reductions,” Pavone told GOBankingRates. “Discussions about eliminating Social Security taxes could impact funding for the program, leading to potential benefit reductions for future retirees. Gen Xers should prepare for the possibility of reduced payouts or increased retirement age thresholds.”
Steep Tariffs on Imported Goods
One of the cornerstones of Trump’s economic agenda is to impose high tariffs on imported goods as a way of bolstering U.S. manufacturing. Among his proposals is to levy a 25% tariff on imports from Canada and Mexico and impose an additional 10% tariff on goods from China, which could push that country’s tariffs to 60%.
One worry is that these tariffs will push consumer prices higher and potentially put a “dent” in retirees’ purchasing power, according to Lindsay Theodore, thought leadership senior manager at T. Rowe Price.
“The costs of tariffs will be passed on to the end consumer, so it ends up being somewhat of a sales tax,” Theodore explained to Kiplinger. “The dollar might not go as far for retirees on a fixed income.”
Leave Tax Cuts in Place
Trump has also promised to extend the Tax Cuts and Jobs Act (TCJA) of 2017, which is set to expire at the end of 2025. Among other things, the TCJA lowered tax rates across the board, restructured tax brackets and nearly doubled the standard deduction for all filing statuses. The bill also cut the corporate tax rate from 35% to 21%.
“Extending these provisions beyond their 2025 expiration could continue to benefit Gen Xers in their peak earning years, allowing for increased retirement savings,” Pavone said. “Policies such as this one that bolster tax-advantaged retirement savings plans, such as increasing contribution limits, could benefit Gen Xers by allowing them to catch up on savings during their peak earning years.”
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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