Think you got your retirement planned out? Think again as Donald Trump’s plans may affect yours. According to Gallup’s latest survey findings, more than 60% of the elderly population is counting on their Social Security checks for their monthly income while the remaining expect their social security benefits to be a steady source of income that supports them through retirement. However, given the longer life expectancies and the increasing cost of living, it is not recommended to rely solely on the social security system for your retirement income.
Having said that, here’s what Trump said prior to the presidential election on retirement security for Americans:
- I will preserve social security benefits without raising the taxes, cutting down on the benefits or raising the retirement age.
- I will neither raise the social security tax ceiling on earnings nor modify the annual cost of living adjustments.
- I plan to lower the cost of medical care by allowing the import of cost-effective drugs from foreign countries, letting Medicare bargain drug prices and allowing the sale of medical insurance.
- I will implement a comprehensive tax reformation which will streamline income tax by eliminating death tax and alternative minimum tax.
- I will mount a campaign that attacks waste, abuse and fraud in the American government.
According to Trump, sustainable growth in GDP combined with a prudent administration will play a crucial role in securing social security for future generations.
What’s Likely to Change in the Social Security System?
Those nearing retirement can be sure of receiving their benefits as all the reforms being proposed are in the favor of preserving social security. Trump plans to privatize part or all of the social security programs as he believes that directing social security funds into personal saving accounts would swell national savings and this would eventually pump out big money for the country’s economic growth in terms of national investments, increased wages, and improved productivity.
Trump’s retirement savings plan will act as a catalyst that will bring prosperity to all and it carries a lot of appeal for every American who is counting on social security benefits for retirement returns.
Will Trump Cut Down on Medicare and Taxes?
Donald Trump has planned to cut taxes by $6.2 trillion over the coming decade and has promised to increase the federal spending on veterans and military along with developing national infrastructure. He would reform corporate taxes to include a reduction in the corporate income tax rates. When it comes to Medicare benefits, Trump has offered no practical ideas but promises to protect these benefits by allowing negotiations with pharmaceutical companies.
The Need of the Hour
With 77 million baby boomers all set for retirement and expecting to receive their entitlements, much of Uncle Sam’s spending is likely to get consumed by 2035, giving rise to a long-term funding deficit thereafter. The dollars would then only suffice to pay for 77% of the social security benefits.
This is a wake-up call for retirement investors who would now need to save as much as they can and avoid making any changes in their 401(k) contributions. It is always a great idea to save extra for unpredictable changes. The market will continue to remain volatile until the new specifics come to the surface, so you should be focusing on long-term retirement planning with some tolerance for risk.
While it is most likely that more jobs will be created and the wage situation will improve, you would still need to take pre-emptive action for personal benefits. Keep your personal debts to a minimum and create alternatives to your current source of income. Though trump plans to preserve your social security benefits, healthcare expenses will continue to remain a wildcard. Trump’s economic agenda is still unclear and there is no concrete information available as yet and only time will tell how his reformations affect the retirement planning landscape in America.
To retire confidently with a complete peace of mind, invest in an affordable Medicare plan and contribute consistently to your retirement savings.
Rick Pendykoski is the owner of Self Directed Retirement Plans LLC, a retirement planning firm based in Goodyear, AZ. He brings over 30 years of diverse experience as a financial advisor. Rick takes great pride in giving honest and very experienced advice. Rick can readily converse with business owners and people looking to take control of their retirement accounts.