5 Money Moves the Middle Class Should Make as Elon Musk Steps Down From DOGE
Written by
Kerra Bolton
Edited by
Amber Barkley
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Elon Musk is scaling back his involvement with the Department of Government Efficiency (DOGE) to refocus on his business ventures, which have taken a hit in recent months.
While DOGE lacks formal agency status and congressional backing, Musk’s reduced role may still signal a shift in political focus around federal cost-cutting. For middle-class Americans, this shift is worth watching, especially as new budget proposals, potential changes to the federal tax code and debates over entitlements take center stage.
Here are five money moves the middle class should make as Musk steps down from his leadership role at DOGE.
Expect Cuts, Plan for Gaps
Even as Elon Musk scales back from DOGE, government spending cuts are moving forward — just not in the way many, including Musk, had hoped.
President Donald Trump’s “One Big Beautiful Bill” cuts funding for key public programs like housing, education and food assistance, while boosting defense and infrastructure spending.
For the middle class, that means less support from government programs and no meaningful tax relief.
For example, according to the Tax Policy Center, middle-income households would receive an average tax cut of about $1,800, or about 2.4% of their after-tax income, under the bill. In contrast, households in the top 5% of earners would see their tax bill cut by an average of $21,000, or 4.3% of their after-tax income.
Now is the time for households to review their household budget and plan for potential gaps. Households and individuals who rely on tax credits, student aid or healthcare subsidies should prepare for potential changes and explore ways to build financial resilience in case these safety nets are reduced or eliminated.
Strengthen Emergency Savings
Given the potential for policy shifts and economic volatility, it’s prudent for middle-class households to bolster their emergency savings.
Financial experts commonly recommend setting aside three to six months’ worth of living expenses to navigate unforeseen challenges, such as unexpected expenses or income disruptions resulting from changes in federal programs or economic downturns.
According to experts at Vanguard, “If you spend $5,000 per month, your first emergency fund savings milestone should be $2,500 to cover spending shocks. For your longer-term goal of an emergency fund that will cover income shocks, aim to save $15,000 to $30,000 total.”
Monitor Social Security and Medicare Developments
DOGE’s initiatives included attempts to reform entitlement programs. Although Musk has stepped back, discussions around modifying Social Security and Medicare continue.
For example, according to an analysis by the Medicare Rights Center, an advocacy organization, earlier versions of Trump’s bill included proposals that “would strip health coverage from nearly nine million people with Medicaid and Affordable Care Act plans.”
Healthcare advocates also said, “CBO (Congressional Budget Office) projected that taken together, these proposals would cause 13.7 million people to become uninsured.”
However, the final number of how many people could lose healthcare coverage hasn’t yet been tallied.
Middle-class Americans, especially those nearing retirement, should stay informed about potential changes and consider consulting financial planners to understand how adjustments might impact their retirement plans.
Diversify Investment Portfolios
Without Musk, DOGE layoffs could still have a significant impact on the economy.
Cresset Capital market analysts found that “the ultimate economic impact will depend on the final scale of workforce reductions, the ability of the private sector to absorb workers and whether government service disruptions affect broader economic activity.”
With uncertainties surrounding federal policies, the same market analysts recommended “maintaining a diversified portfolio and a long-term investment horizon.”
Specifically, middle-class investors should also consider a diversified portfolio of assets, including stocks, bonds and other instruments, to protect against market volatility and policy-driven economic fluctuations.
Stay Informed and Engaged
Understanding the implications of federal initiatives like DOGE is essential for middle-class Americans.
By staying informed and consulting a financial advisor, individuals can better anticipate policy changes instead of reacting to the latest headlines. A well-informed perspective enables proactive decision-making and strengthens the ability to advocate for policies that reflect their financial interests and long-term goals.
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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