What a Trump Administration Means for Your Retirement


What impact will a Trump presidency have on the 46 million Baby Boomers living in the U.S.?  President-elect Trump, a Baby Boomer himself, has his work cut out for him when it comes to dealing with Social Security and Medicare.

Personal Capital recently released its 2016 election report, which assesses the short and long-term market and personal finance implications of a Trump presidency and includes an analysis of Trump’s policies on taxes, Social Security and health care.

While Wall Street has mostly been in rally mode following Trump’s win, Personal Capital urges Americans not to let the election outcome impact their long-term investment strategies. All elections stir emotion, but this one was more polarizing than most, potentially causing investors to react impulsively in changing their financial plans. Personal Capital says this is a no-no for seniors.

On planning for taxes, Personal Capital suggests it would be wise to wait and see what, if any, legislation is passed before significantly changing a tax strategy. Regardless, now is an ideal time to review investments and speak with a professional investment advisor to make sure taxes are optimized.

One of Trump’s tax plans would have a single filer with an adjusted gross income (AGI) of under $25,000 pay no taxes. A married couple filling jointly could together have AGI of under $50,000 and pay no taxes. This would mean that seniors in low income tax brackets could possibly be looking at tax-free income in retirement.

When it comes to Social Security, Trump’s campaign promise was to protect Social Security benefits. Because of the vagueness of his plans for the future of Social Security, the Personal Capital report advises people nearing retirement age, (the age when they will elect to start receiving Social Security), to maximize their benefits on the assumption that no major changes to payouts will occur.

In other words, don’t rush to take it. It remains very possible, according to Personal Capital, that investors over the age of 60 will experience benefit reductions and that cost of living adjustments will be reduced to reduce the risk of Social Security insolvency. While this may be bad news to those already receiving it, this “reduced risk” means you shouldn’t let fear push you to take payments earlier than planned, because the good news is it won’t run dry.

During his campaign, Trump pledged to repeal and replace Obamacare. Whether a full repeal will happen remains to be seen. However, President-elect Trump has reiterated that he wants Americans to have access to Health Savings Accounts (HSAs), which are tax-free medical savings accounts that allow individuals to save a portion of their income to help defray medical costs. He also has said he wants to allow the purchase of insurance across state lines. According to Personal Capital, if Trump’s plan is enacted, investors should not expect health care costs (and especially prescription drug costs) overall to get significantly less expensive.

For most Baby Boomers, whether to expect any incoming changes to Medicare of course remains a great concern. Trump’s transition website pledges to “Modernize Medicare, so that it will be ready for the challenges with the coming retirement of the Baby Boom generation – and beyond.” But other than that, details are yet to be heard.

After the election, Judith Stein, executive director of the Center for Medicare Advocacy, issued the following statement in her message “Moving Forward with Hope.”

“We hope the new administration will … remember why Medicare was enacted and how best to ensure it helps today’s beneficiaries as well as coming generations. We needed Medicare because private insurance failed to cover 50% of older people. We hope they won’t turn back history by giving Medicare away to that private insurance world, a world that didn’t, and doesn’t, want to insure people who most need health care,” she wrote.