4 Reasons You Shouldn’t Retire Until After the 2024 Election if You Think Trump Will Win
The presidential elections are a mere few weeks away, and for soon-to-be retirees, this could have several implications. For instance, elections usually tend to trigger market volatility, which can negatively affect retirement funds.
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Mark Friedlich, Esq., CPA, Vice President of Government Affairs at Wolters Kluwer noted that retirement is a significant life decision with substantial financial implications.
For those who believe Trump will win the 2024 election, understanding the potential shifts in policies regarding taxes, healthcare, market dynamics and economic recovery plans is vital. “Weighing these factors may influence the decision to delay retirement for a more advantageous situation post-election,” added Friedlich.
So, if you’re planning on retiring soon, some experts argued that you might be better off postponing this plan until after the elections if you think former President Donald Trump will win.
Taxes Implications
Trump has been advocating for tax cuts and reforms that could benefit retirees, according to Frieldich.
For instance, the Trump Tax Cuts and Job Acts (TCJA) enacted in 2017– which many saw as a huge overhaul of the tax system is set to expire in 2025. These include lower individual income tax rates, increased standard deduction, expanded child tax credit, changes to itemized deductions, and higher estate tax exemption.
Yet Trump said that if he wins, he will make these changes permanent, which could benefit retirees who rely on fixed incomes.
According to Dr. Jim Ronan, adjunct professor of political science at Villanova University, if the expansion were to happen, those considering retirement may notice a boost in their take-home pay, which may provide an incentive to keep working a bit longer.
It’s also important to note that while some Americans want to delay retirement until after the 2024 election, likely expecting more favorable tax and regulatory environments if Trump wins, the changes might not be immediate.
“They should take note, though, that change in government is often slow-moving,” said Thomas Savidge, an economist at the American Institute for Economic Research, adding that any changes undertaken by a future Trump administration likely won’t take effect until well into 2025.
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Trump’s Proposed Tariffs Implications
Trump has proposed significant tariff increases, varying from 10% on all U.S. imports to 60% on imports from China, as the Peterson Institute for International Economics reported.
Yet, as Friedlich argued, many economists believe these tariffs could lead to higher inflation, increased prices for consumer goods, and reduced purchasing power of fixed incomes.
“If retirees depend on fixed incomes, rising prices could diminish their purchasing power,” he added. “Waiting until after the election might provide clarity on whether tariffs will continue to influence economic stability.”
Social Security Implications
One of Trump’s tax proposals includes eliminating federal taxes on Social Security benefits. This could impact millions of retirees, and for many of them, it might be more beneficial to wait until after the election to start claiming benefits.
As Ronan argued, those payments may be increased if the plan were to become law.
Indeed, these taxes, which have been in place since the 1980s, affect 40% of people who receive them, according to the Social Security Administration (SSA).
According to the Tax Policy Center, removing them would lower households’ taxes by an average of $550.
Stock Market Implications
Another reason seniors should delay retirement until after the elections if Trump wins is that his proposal to lower the corporate tax rate to 15% could boost stock market performance, benefiting retirement portfolios, according to Friedlich.
As he noted, historically, markets can react strongly to election results, so if Trump wins, his policies could affect investor confidence and stock market performance.
“This is particularly relevant for retirees whose portfolios rely on stock market performance,” he said. “Those nearing retirement may want to wait and see how the election impacts their investments before making the leap.”
Other experts echoed the sentiment, saying that it’s smart to hold off until the dust settles after the election.
“You want to make sure you have all the facts before making a move that big,” said Joe Camberato, CEO of National Business Capital.
The Bottom Line
Experts also noted that there are several factors to keep in mind for individuals nearing retirement age.
For instance, the time value of money and potential lost retirement time should be weighed against potential tax savings, noted Friedlich, adding that consulting with financial advisors is key to modeling different scenarios based on potential policy outcomes.
“Ultimately, while the election outcome could impact retirement finances, it should be just one factor in a comprehensive retirement decision-making process,” he added.
Several experts echoed this statement, such as Chad Gammon, CFP and owner of Custom Fit Financial, who said that while he understands the sentiment behind the idea of delaying retirement based on election outcomes, he doesn’t believe there’s a strong reason to do so.
“Presidential policies can certainly influence markets and the economy in the short term, but retirement is more about long-term planning,” he said, adding that market volatility tied to elections tends to be temporary, and it’s risky to base such a significant decision on speculative outcomes.
“Having a solid, sustainable retirement strategy is more important than timing based on political shifts,” he added.
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. You can find more coverage of this topic on GOBankingRates.com.
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