Nov 29, 2024
Donald J. Trump will officially become the 47th president of the United States after winning both the popular vote and the electoral college in November.
The former and future President will be entering office in January 2025 with a Republican House and Senate, and he has declared that his victory in all seven swing states has given him a mandate to govern and impose his policies.
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This means that retirees could see some big changes in the next four years as the Trump administration gets to work on its priorities. Here are three big ways that the second Trump presidency could affect you if you are retired in the U.S.
1. Taxes on Social Security benefits could disappear
President Trump repeatedly touted his plan to eliminate taxes on Social Security benefits throughout the election. Currently, retirees are taxed on part of their Social Security benefits if their provisional income exceeds $25,000 for single tax filers and $32,000 for married joint tax filers.
Since these thresholds aren’t indexed to inflation, a growing number of retirees are subject to this tax each year. This has increasingly caused a financial burden on seniors since benefits are often insufficient to cover costs even before the government takes a cut. Eliminating these taxes could be a financial relief to seniors — although it would come at a price.
Social Security's trust fund is already scheduled to be depleted by 2035 and eliminating revenue from taxing benefits could only worsen the program’s shortfalls, necessitating a benefit cut even earlier than anticipated.
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2. Changes to Medicare
Medicare provides health care to retirees 65 and over. Trump has pledged that there will be no cuts to this benefit program, so retirees won't lose access.
However, the Trump administration has also pledged to make major cuts to government spending through an independent Department of Government Efficiency that’s to be spearheaded by Elon Musk. DOGE will be focusing on every government agency, which likely includes Medicare and Medicaid since they take up a significant percentage of the budget.
Trump has nominated Mehmet Oz to serve as the head of Centers for Medicare and Medicaid Services. When he announced Oz for the position, Trump shared that the physician and television personality would have a goal of cutting “waste and fraud within our country’s most expensive government agency."
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While Oz likely won't cut benefits, efforts to cut waste could potentially impact the ways in which benefits are administered. Oz has also been a vocal endorser of Medicare Advantage Plans over traditional Medicare, and may promote those plans, offered by private insurers, to more seniors.
3. Interest rates could stay higher
Trump has made clear he wants the Federal Reserve to lower interest rates to make borrowing costs more affordable. However, his influence on the central bank is very limited. He can’t order the Fed to lower rates, nor does he have the authority to fire Fed Chair Jerome Powell who has made clear he will stay through the end of his term in 2026.
Since Trump has proposed both tariffs and tax cuts, which could have an inflationary impact, the Fed may slow down its plans for rate reductions or even pause interest rate cuts altogether.
Higher interest rates are good for seniors who have money in savings and CDs — but not great for those who might want to downsize and get a new mortgage or who need to borrow for other reasons.
Ultimately, seniors will have to wait and see what changes, if any, are made. The best thing for retirees will be to shore up their financial situation to make sure they're in the best place possible no matter what changes happen. This means shopping around for the right Medicare plan, maintaining a healthy savings account balance, and not over-relying on Social Security as a percentage of income.
With the right financial foundation, seniors can withstand whatever political changes come their way.
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Christy Bieber has 15 years of experience as a personal finance and legal writer. She has written for many publications including Forbes, Kilplinger, CNN, WSJ, Credit Karma, Insurify and more.
