3 Ways Trump’s Presidency Could Affect How Gen X Plans for Retirement
With the oldest Gen Xers turning 60 this year, they no longer have the luxury of viewing retirement as something in the distant future. Many will qualify for Social Security retirement benefits during the next four years — which means they have a keen interest in how President Donald Trump’s policies might impact their retirements.
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Here’s a look at three ways Trump’s presidency could affect how Gen X plans for retirement.
During the 2024 presidential campaign, Trump floated the idea of eliminating federal income taxes on Social Security benefits. This could have a dual effect on Gen Xers in retirement, according to Melissa Murphy Pavone, CFP, CDFA, founder of Mindful Financial Partners, which specializes in personalized, holistic financial planning that aims to empower clients to navigate life’s transitions (including retirement).
“While this change could provide immediate financial relief, it may also accelerate the insolvency of the Social Security Trust Fund, potentially leading to future benefit reductions,” Pavone told GOBankingRates. “Discussions about eliminating Social Security taxes could impact funding for the program, leading to potential benefit reductions for future retirees. Gen Xers should prepare for the possibility of reduced payouts or increased retirement age thresholds.”
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One of the cornerstones of Trump’s economic agenda is to impose high tariffs on imported goods as a way of bolstering U.S. manufacturing. Among his proposals is to levy a 25% tariff on imports from Canada and Mexico and impose an additional 10% tariff on goods from China, which could push that country’s tariffs to 60%.
One worry is that these tariffs will push consumer prices higher and potentially put a “dent” in retirees’ purchasing power, according to Lindsay Theodore, thought leadership senior manager at T. Rowe Price.
“The costs of tariffs will be passed on to the end consumer, so it ends up being somewhat of a sales tax,” Theodore explained to Kiplinger. “The dollar might not go as far for retirees on a fixed income.”
Trump has also promised to extend the Tax Cuts and Jobs Act (TCJA) of 2017, which is set to expire at the end of 2025. Among other things, the TCJA lowered tax rates across the board, restructured tax brackets and nearly doubled the standard deduction for all filing statuses. The bill also cut the corporate tax rate from 35% to 21%.
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