Why You Should Delay Retirement if Trump Wins in 2024

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As the 2024 presidential election approaches, those contemplating retirement may want to reconsider their timing, especially if they believe Donald Trump will secure a victory. Elections can influence market stability, posing potential risks to retirement funds.

Mark Friedlich, Esq., CPA, and Vice President of Government Affairs at Wolters Kluwer, highlighted that the implications of retiring should be thoroughly evaluated. For supporters of Trump, there are specific policy changes that could directly impact their financial future.

Tax and Economic Impacts

Trump has championed tax reforms that may benefit retirees. The 2017 Tax Cuts and Jobs Act brought significant changes, such as lower individual income tax rates, an increased standard deduction, and expanded child tax credits. These provisions are set to expire in 2025.

If Trump wins, he pledges to make these tax cuts permanent, offering a potential advantage for retirees living on a fixed income. Dr. Jim Ronan of Villanova University suggests that extending retirement could result in increased take-home pay, making continued employment more enticing.

Tariffs and Inflation Concerns

Potential new tariffs proposed by Trump could affect the economy. Economists warn that higher tariffs may cause inflation and elevate costs for consumer goods. This could reduce the purchasing power of those on fixed incomes.

If you’re reliant on a fixed income, waiting until after the election to retire may provide better insight into how these economic policies will unfold. As Friedlich notes, “Rising prices could shrink your spending power, so clarity post-election is crucial.”

Social Security Changes

Trump has proposed eliminating federal taxes on Social Security benefits, a move that could brighten the financial outlook for many retirees. According to the Social Security Administration, about 40% of recipients are currently taxed on these benefits.

Ronan points out that removing these taxes might increase payouts, therefore making it financially sensible for some to delay retirement until after the election to see if Trump’s policies are enacted.

Stock Market Reactions

Trump’s proposal to reduce the corporate tax rate to 15% could spur stock market growth, benefiting retirement portfolios. Historically, markets react significantly to election results; policies favoring lower corporate taxes could boost investor confidence and enhance stock market performance.

This aspect is particularly vital for those whose retirement savings are heavily invested in stocks. According to Friedlich, waiting until the election’s outcome might offer a more stable financial environment for your retirement investments.

Conclusion

Considering these various factors and potential policy changes is essential for those nearing retirement age. Consulting with financial advisors to model different scenarios can provide clarity and assist in making an informed decision.

While the election outcomes might affect retirement finances, it is important to view these as just one component of a comprehensive retirement strategy. A long-term, sustainable retirement plan should take precedence over short-term political shifts.

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