The Election Results and Your Retirement
THE ELECTION RESULTS AND YOUR RETIREMENT
The voters have spoken, and we have a new President-elect and Congress. Let's talk about what this could mean for you.
With President Trump winning a second term, and Republicans controlling (with narrow majorities) the Senate and the House, it is possible that key Trump priorities can more efficiently move through Congress and be signed into law. 2025 will likely be a busy year for legislation on Capitol Hill.
And it should come as no surprise that the decisions made in Washington D.C. have a direct impact on your retirement income and savings. So, we have prepared a quick evaluation to hopefully help answer the chief questions you may have.
Will the Trump Tax Cuts get extended? The 2017 Trump Tax Cuts are set to expire next year, which means without Congressional action, tax brackets and estate tax exemptions will revert back to their older, higher rates in 2026. While his official campaign stance has been to make the tax cuts permanent (excluding the SALT cap), it is more likely that Congress will debate an extension of the tax cuts, allowing them to sunset at a later point in the future. Regardless, this will need to be an early priority following inauguration, as the goal is to pass the legislation in 2025 before the existing package expires.
Will new taxes be imposed on retirement and savings accounts? Over the past four years of the Biden administration, we have seen the retirement accounts of wealthier Americans come under attack. This included proposals outlining new ways to tax qualified accounts when account balances reach certain levels and place limitations on Roth conversions. With Trump, we will likely get a reprieve from this type of legislation. However, many in Washington would still like to see additional revenue generated from the retirement accounts of wealthier savers, so it’s an issue we’ll need to keep an eye on.
Will reforms impact Social Security? Neither candidate made Social Security reform a main component of their campaign, despite the fact that without changes, the Social Security Trust Fund will no longer be able to pay out full benefits within the next ten years. President-elect Trump has proposed eliminating income taxation of Social Security benefits, which currently generates tens of billions of dollars in revenue. It’s unclear at this point if this proposal will gain traction on Capitol Hill, but it is certainly worth watching as the new administration lays out its priorities for the next four years.
Will there be an overall change in government spending? Our national debt is nearly $36 trillion and President Trump has said he will offset the cost of extending the Trump Tax Cuts with new tariffs, but it is not clear if that proposal will have legs in Congress. While it’s yet to be seen if the new administration and Congressional leaders focus on reducing the deficit in earnest, many of Trump’s policy proposals are primarily focused on stimulating the economy, not directly reducing the federal debt.
We are keeping a close eye on developments in Washington, as things can move quickly when one party has control, and will continue to keep you updated and informed on how certain legislative moves may impact your retirement. To see how Cornerstone can help you with financial planning and your retirement portfolio, call our office at (775)853-9033 or click here.
Based in Reno, NV, Cornerstone is for individuals and families looking to grow wealth, protect and preserve their life savings, and plan for the distribution of their estate in a tax-efficient manner through a tailored strategy. Schedule a time to discuss your financial goals with us.
This information does not constitute legal or tax advice. PCIA and its associates do not provide legal or tax advice. Individuals should consult with an attorney or professional specializing in the fields of legal, tax, or accounting regarding the applicability of this information for their situations.
Advisory products and services offered by Investment Adviser Representative through Prime Capital Investment Advisors, LLC ("PCIA"), a federally registered investment advisor. PCIA: 6201 College Blvd., Suite #150, Overland Park, KS 66211. PCIA doing business as Prime Capital Wealth Management ("PCWM") and Qualified Plan Advisors ("QPA"). ©2023 Cornerstone Retirement Group, Inc. - All Rights Reserved.