What a Trump presidency could mean for Social Security
If you're 63, you're eligible to sign up for Social Security right away. However, your full retirement age isn't until 67, so signing up immediately would mean reducing your monthly benefit. With a $509,000 nest egg, which is a decent amount of money but not a ton, you may want to hold off on claiming benefits for a few more years.
Meanwhile, Trump has talked about eliminating taxes on Social Security benefits. Currently, the income thresholds at which taxes on benefits apply are pretty low, so many recipients are subject to them.
On the one hand, not having to pay taxes on your Social Security income puts more money in your pocket. On the other hand, eliminating taxes on benefits could have negative consequences given that Social Security is roughly a decade away from exhausting its combined trust funds.
“President Trump’s proposals to eliminate taxation of Social Security benefits, end taxes on tips and overtime, impose tariffs, and expand deportations would all widen Social Security’s cash deficits,” said the Committee for a Responsible Federal Budget.
The nonpartisan, non-profit organization estimates that President Trump’s agenda would advance insolvency by three years, from FY 2034 to FY 2031, and lead to a 33% across-the-board benefit cut in 2035, up from the 23% the Congressional Budget Office projects under current law.
So stripping the program of that added tax revenue may not be such a great thing, even though it might work to seniors’ advantage initially.
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Read MoreWhat a Trump presidency could mean for taxes and investments
Trump will no doubt try to extend provisions of the 2017 Tax Cuts and Jobs Act scheduled to sunset at the end of 2025. He also wants to lower the corporate tax rate from 21% to 15% for firms that make their products in America. Corporate tax cuts could boost the stock market. That would be good news for retirees having to live at least partially off of their investments.
On the other hand, there's concern that Trump's tariffs and plans to deport immigrants could have a negative impact on the economy. His policies will reignite inflation, according to 16 Nobel Prize-winning economists who signed a letter about the issue. This means interest rates could rise again, reducing your purchasing power and making borrowing more expensive. If you're thinking of retiring now, assess your debts. You may want to hold off on ending your career if you still owe quite a bit on your credit cards or have a significant amount of debt on a whole.
If you'll be retiring at 63 and tapping your nest egg, an unstable economy could impact your investments and income. It's a good idea to shift toward more stable assets in retirement regardless of the political backdrop. One rule of thumb says to subtract your age from 110 to know how much of your portfolio should be in stocks.
Keep calm and maintain a balanced portfolio with the right asset allocation for your investing horizon. Try not to make any rash investing decisions based on the news, since no one can accurately predict what's going to happen, and stay focused on your long-term financial goals.
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