I’m a Financial Advisor: 3 Reasons My Retired Clients Are Concerned About a Trump 2024 Win
Regardless of where you stand in terms of politics, change can be hard. For those who are on the verge of retiring, or who have already retired, the last thing they want is to have to worry about how those changes will affect their retirement plans.
Learn More: I’m an Economist: Here’s My Prediction for Social Security if Trump Wins the 2024 Election
Read Next: 7 Reasons You Must Speak to a Financial Advisor To Boost Your Savings in 2024
But with the turbulent presidential election well underway — and set to end in only a few months’ time — many retirees and soon-to-be retirees want to know what’s coming. GOBankingRates spoke with two financial advisors, Joseph Favorito and Robb Hill, about their clients’ top concerns about a potential Donald Trump 2024 win.
Changes to Social Security
Social Security is the primary source of retirement income for many retirees. In 2017, the Social Security Administration (SSA) found that roughly half of all households over the age of 64 receive about 50% of their income from Social Security. Around a quarter of older individuals rely on their benefits for 90% or more of their income.
The Social Security program is already poised to face some significant challenges going forward — and not necessarily because of the president. In a 2024 report, the Social Security Board of Trustees estimated that retirees will receive just 83% of their full benefits amount by 2035 due to the SSA running out of its reserves at around that time.
Right now, the program is primarily funded through payroll tax deductions, which employers and employees pay equally — 6.2% each. Self-employed individuals pay the full amount of 12.4%. This payroll tax is applied only to the first $168,600 of the individual’s annual income.
If Trump is elected, he might change how Social Security is taxed. Depending on how you look at it, this could be either a good or a bad thing. But Joseph Favorito, the managing partner at Landmark Wealth Management LLC, primarily sees it as a positive.
“One of the recent questions we have received is around President Trump’s recent proposal/suggestion that he would like to end the taxation of Social Security benefits,” he said. “I personally support the idea, as taxing Social Security income is effectively a tax on your taxes and was historically exempt from federal income tax prior to 1984.
“However, 15% of Social Security is already tax free to most Americans. Whether or not [Trump] would have the votes in Congress to make the entire benefit tax free remains to be seen.”
Favorito also pointed out that there are other policies that could have a more direct impact on the average consumer. It depends, however, on whether or not Trump receives enough support after getting re-elected to pass these changes.
Find Out: I’m an Economist: Here’s My Prediction for Social Security If Kamala Harris Wins the Election
Potential Market Volatility and the Unknown
Another big reason why many people — retired and otherwise — are concerned about a potential Trump win is how it’ll affect the market. On this front, Favorito predicts that the person in office might not have as much of an impact as people fear.
“As it pertains to market volatility, I don’t think it matters very much who the president will be. Markets ultimately go up, regardless of who is in office,” he said. “When policy is more pro-growth, companies will hire new people if they need to. When policy is more restrictive, companies will lay people off if they need to. Either way, they will find a way to reach their bottom-line goals.”
What it comes down to is understanding how to work with the changes that occur. This is just as true for businesses as it is for individuals about to leave the workforce.
“I always say that Amazon will figure out a way to deliver a package to your front door and make a profit, no matter who is in office,” said Favorito. “They just want to know the rules so they can figure out how to maneuver around them.”
Changes to Healthcare
Just like with Social Security, many retirees are concerned about changes to healthcare. When Trump was originally in office, he proposed doing away with the Affordable Care Act (ACA) and implementing his “Healthcare Reform to Make America Great Again” proposal instead. Among other things, this would have cut Medicare funding.
Around 66 million people rely on Medicare. As the program currently stands, it’s predicted to see a serious funding deficit by 2036. If Trump is reelected and cuts the program further, this could be a problem for retirees. Even if he doesn’t, changes would need to be made to support the program long-term.
Robb Hill, president of R. Hill Enterprises, Inc., a financial consulting firm, said that this is a major concern for many of his firm’s clients — especially as pertains to their retirement savings.
“The proposed tax reforms and changes in healthcare policies could directly affect their retirement income and healthcare costs,” he said.
Michael Collins, a CFA and CEO of WinCap Financial, added that proposed and existing tax breaks or policy changes could impact soon-to-be and current retirees — just in different ways.
“For example, if taxes are lowered, this may result in less revenue for government programs such as Social Security and Medicare that provide income for retirees. On the other hand, if taxes are increased on high-income individuals and corporations, this may potentially generate more revenue to support these programs,” he said.
“Any cuts or reforms made to Social Security and Medicare could directly affect future retirees’ benefits and healthcare coverage,” Collins continued. “Changes in healthcare legislation could also have an impact on retiree healthcare costs.”
Preparing for Possible Changes
Regardless of who gets elected, there are some things retirees can do to better prepare themselves. Here are a few:
Create a budget based on your current and anticipated expenses going forward — this can be done whether or not you’ve already retired.
Contribute to retirement savings accounts like 401(k) plans and IRAs if you’re not retired yet.
Spread out your investments across different asset classes to minimize risk.
And stay informed about possible changes or developments that could affect your income or retirement plans.
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 I’m a Financial Advisor: 3 Reasons My Retired Clients Are Concerned About a Harris 2024 Win.
More From GOBankingRates
7 Reasons You Should Consider a Financial Advisor -- Even If You're Not Wealthy
Trump Wants To Eliminate Income Taxes: How Would That Impact You If You Are Retired?
This is The Single Most Overlooked Tool for Becoming Debt-Free
This article originally appeared on GOBankingRates.com: I’m a Financial Advisor: 3 Reasons My Retired Clients Are Concerned About a Trump 2024 Win
