3 Challenges You Could Face If Trump Is Elected and You Plan To Retire in the Next 4 Years
Written by
Kerra Bolton
Edited by
Zuri Anderson
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
The potential re-election of Donald Trump could bring significant challenges for those who are on the cusp of retirement.
From market volatility and shifting interest rates to changes in Social Security and health care, retirees may face increased uncertainty about their financial futures.
“There was a huge transfer of wealth that has taken place (during the first Trump Administration), and it continues to be destabilizing,” said David Winslow, a retired small business owner from North Carolina. “It’s an existential problem as it is a structural deficit.”
With the Trump Administration’s history of economic deregulation and fluctuating tax policies, near-retirees need to understand the three challenges you may face if Trump is elected and you plan to retire in the next four years.
Unpredictable Social Security Benefits
Former President Trump previously said he would “do nothing to Social Security.” If the president and Congress don’t take action, the federal program faces a shortfall in 2034, which could result in a 23% reduction in benefits for millions of Americans in 2035.
By doing nothing, Trump is doing something, said Wayne Winegarden, an economist at Pacifica Research Institute.
“He is allowing the program to go over the ‘fiscal cliff,’ which we will hit within the next decade,” he explained. “If Trump would address the problems now, the required costs to fix the programs could be less, and people can have time to plan for these changes.
“So, undoubtedly, doing nothing makes things worse.”
Unstable Retirement Savings
If Trump pressures the Fed to keep interest rates low, the Federal Reserve’s monetary policy might become more unpredictable.This could affect retirees’ returns on safer, interest-bearing investments like bonds, CDs and savings accounts.
“With an uncertain interest rate environment, that could potentially impact the income retirees receive from their investment portfolio, particularly on the fixed income allocations,” said Matt Mancini, a wealth planning team leader at Wilmington Trust.
However, market fluctuations are a common occurrence with retirement portfolios, said Derek Mazzarella, a financial advisor at Gateway Financial Partners.
“The S&P 500 drops 20% on average every 6.3 years,” Mazzarella said. “One way to minimize the risk and potential losses in a retirement portfolio is to implement a bucket strategy which involves segmenting your retirement assets into time frames.”
Healthcare Instability
Christopher Stroup, founder and president of Silicon Beach Financial, said the healthcare sector could face volatility due to potential policy changes related to drug pricing, healthcare reform and the overall regulatory environment.
“Trump’s previous administration pursued numerous changes to the Affordable Care Act (ACA), and similar moves could lead to uncertainty for healthcare companies,” Stroup said.
“To mitigate this risk, retirees may consider diversifying their portfolios to reduce their exposure to healthcare stocks and increasing their holdings in more stable sectors, like utilities or consumer staples.”
Repealing or weakening the ACA could destabilize health insurance markets and raise premiums for pre-Medicare retirees. If healthcare becomes more expensive or less accessible, retirees may struggle to cover medical expenses.
“As premiums grow larger and coverage becomes less affordable, more and more healthy people would stop purchasing insurance, triggering additional premium increases,” said John Holahan, writing for The Commonwealth Fund. “Eventually, the non-group insurance market would be virtually wiped out.”
Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. For more coverage on this topic, please check out 4 Challenges You Could Face If Kamala Harris Is Elected and You Plan To Retire in the Next 4 Years.
More From GOBankingRates
