5 Reasons Your Retirement Savings Won’t Be Enough If Trump Wins
Many American voters are wondering how the outcome of this year’s Presidential race between former President Donald Trump and Vice President Kamala Harris will affect their wallets.
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For those planning for or approaching retirement, concerns about economic policies, market volatility, and financial security — all factors that affect retirement savings — are even more pressing.
Here are five reasons your retirement savings won’t be enough if Trump wins.
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You Live On a Fixed Income
Trump said the President should have greater sway over the Federal Reserve’s rate-setting decisions.
Historically, the Federal Reserve has acted independently of the President. Trump would have to exert more influence on the agency by appointing Board Members (subject to Senate approval), demoting the current chair and nominating a successor, or gaining control through the courts. Most of these options would result in a protracted legal battle.
“If Donald Trump wins, we may see even stronger pressure on the Fed to cut interest rates,” said Paul Tyler, a retirement planner. “While that could be a boon for the stock market, it could put more pressure on individuals living on a fixed or interest-generated income.”
Retirees who rely on interest income from savings accounts, certificates of deposit (CDs), or bonds could see lower returns, reducing their income. Lower returns combined with inflation would make it more difficult for retirees on a fixed income to cover living expenses and maintain their standard of living.
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Higher Consumer Prices
The former President said he would impose a universal baseline tariff on all U.S. imports, ranging from 10 to 20%. Trump also said he would levy a 60% tariff on all U.S. imports from China.
Tariffs increase the cost of imported goods, leading to higher inflation and eroding consumers’ purchasing power. For retirees, this could make their savings less valuable in terms of what they can buy in the future.
“These proposals could add up to hundreds of dollars of taxes on American families if that were to go through,” said Joel Griffith, an economist with the Heritage Foundation.
The Tax Foundation, a public policy watchdog, estimated that Trump’s proposals to impose baseline tariffs and levy a 60% tariff on Chinese goods could raise taxes for consumers and businesses by $300 billion and $200 billion, respectively.
You Rely On Social Security
Trump has pledged not to cut Social Security benefits or raise the retirement age if re-elected.
However, retirees could see fewer benefits within a decade unless the next President and Congress work together to avoid a shortfall in Social Security’s combined trust fund. According to the Urban Institute, the depletion of Social Security benefits is projected to affect 81 million retirees, people with disabilities, and their families.
In addition, Trump has vowed to continue or make permanent his signature 2017 tax reforms that are set to expire by the end of next year. While continuing the tax cuts is a boon for businesses and high-income earners, it means less money available for spending on federal programs like Social Security.
Your Investment Portfolio
Trump’s position on trade tariffs could also affect your investment portfolio.
For example, industries like manufacturing, technology, and agriculture are vulnerable to tariffs. David Ortega, an agricultural professor at Michigan State University, said China is a “lifeline” to thousands of American farmers.
“In 2023, the country emerged as the largest market for U.S. agricultural exports, with a total value of more than $28 billion,” Ortega wrote in a Newsweek editorial.
Ortega said, “Higher tariffs would result in increased prices for goods and services, putting more pressure on household budgets at a time when many Americans are already facing heightened costs.”
Trump’s stance on trade tariffs could lead to a trade war. Your retirement portfolio could be negatively affected if you are heavily invested in agriculture, manufacturing, technology, or other sectors reliant on global trade policies.
Your Health
Trump has pledged to “never give up” on repealing or replacing the Affordable Care Act, commonly known as “Obamacare.”
Instead, Trump said he would make the program “much better and far less money.” However, the details are forthcoming.
As President, Trump supported the “No Surprises Act” in 2020, which aimed to protect consumers from unexpected healthcare costs. He also initiated efforts to ensure that Medicare would pay the same drug costs as other high-income countries for certain medications.
Nevertheless, Trump favors taking a hands-off approach to health care policies and leaving it to the states to decide. Depending on your health and where you live, this approach could affect your medical bills and erode your retirement savings.
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 4 Reasons Your Retirement Savings Won’t Be Enough If Harris Wins.
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This article originally appeared on GOBankingRates.com: 5 Reasons Your Retirement Savings Won’t Be Enough If Trump Wins