Trump’s 2026 Budget Proposal: 4 Things Retirees Need To Know
Written by
Kerra Bolton
Edited by
Amber Barkley
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President Donald Trump’s 2026 budget proposal, known as the “One Big Beautiful Bill Act,” introduces significant changes to federal spending and tax policies.
While aiming to reduce non-defense discretionary spending and extend tax cuts, the proposal has raised concerns about its potential impact on retirees who rely on federal programs for income, healthcare and essential services.
“These potential shifts could slow benefit growth, raise Medicare premiums or target higher earners with stricter eligibility or tax rules,” said Aaron Cirksena, founder and CEO of MDRN Capital. “The biggest concern is uncertainty right now, and retirees rely on predictability, so even these small changes can have a big impact on them.”
Here are four things retirees need to know about Trump’s 2026 budget proposal.
Medicare at Risk
According to Congressional Budget Office analysis, if Trump’s budget proposal, currently being debated in Congress, raises the federal deficit by $2.3 trillion over the next decade, it would automatically trigger spending cuts, including a projected $500 billion cut to Medicare.
Such cuts may lead to reduced payments to providers, potentially affecting seniors’ access to healthcare services.
An analysis by the Medicare Rights Center, an advocacy organization, found that the “bill would undermine access to long-term care by shifting costs to states, likely resulting in cuts to HCBS (Home-and Community-Based Services). It would also make it harder for people to qualify for Medicaid coverage and avoid gaps in care.”
Aging Services Cut
Key programs under the Older Americans Act, such as nutrition services and caregiver support, are at risk of significant funding reductions or elimination.
For example, the National Council on Aging found that the Trump administration proposes to move the Aging Network Support program to the Centers for Medicare and Medicaid Services (CMS) and reduce the program’s funding by over 40%. The program allows seniors to live independently in their homes.
This matters for individuals saving for retirement, because adult children often incur significant costs for caring for their parents.
According to an AARP study, “On average, caregivers spend 26% of their personal income on caregiving expenses. One in three dips into their personal savings, like bank accounts, to cover costs, and 12% take out a loan or borrow from family or friends.”
Medicaid and Food Aid Slashed
The budget proposes substantial cuts to Medicaid and the Supplemental Nutrition Assistance Program (SNAP), which could disproportionately affect low-income seniors who depend on these programs for healthcare and food security.
According to NPR, “If approved, starting in fiscal year 2028, states would be required to pay between 5% and 25% of food benefit costs for the first time. … In addition, states would receive less federal support to administer SNAP. The proposed changes would decrease the federal reimbursement rate for administrative costs to run SNAP from 50% to 25%.”
An analysis of the Medicaid and SNAP cuts by The Commonwealth Fund found that these changes create ripple effects that affect the economies of entire communities, not just low-income households.
“For example, some of the food purchased in Georgia may have been grown in Kansas or processed in Tennessee, so lower grocery purchases in one state may cause losses in other states,” the Commonwealth report stated. “A nurse who loses her job at a Louisiana clinic might reside in Texas; thus, a job lost in one state could create economic losses in another.”
Retirement Tax Planning Becomes Crucial
While the “One Big Beautiful Bill Act” proposes extending tax cuts from the 2017 Tax Cuts and Jobs Act, it does not include provisions to eliminate taxes on Social Security benefits, contrary to some expectations.
The bill does introduce a new $4,000 standard deduction for seniors aged 65 and older, providing tax relief for individuals with adjusted gross incomes of $75,000 and couples with incomes of $150,000 annually.
However, the substantial tax cuts and increased spending outlined in the proposal are projected to add approximately $3.8 trillion to the national debt over the next decade. This significant increase in the deficit raises concerns among financial experts about potential future tax hikes to address the fiscal imbalance.
“If the proposal is passed, it could increase taxes on retirement income, making Roth conversions and smart withdrawal strategies more important than ever,” Cirksena said. “The best move right now is do not wait. Review incomes, run scenarios and add some flexibility into your plan. Better to adjust early than react late.”
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