As the dust settles on the U.S. presidential election, it’s a great time to take stock of your financial strategies —especially your retirement plan. Every new administration brings with it potential shifts in policies, taxes, and the economy, all of which could impact your future nest egg.
Here are 5 considerations for preparing for a shift in leadership:
Take Control Over Your Financial Plan
No matter what happens in the future, having a sense of control over your financial life is critical to your well being.
The Boldin Retirement Planner gives you the ability to easily track progress toward goals, make informed decisions with confidence, run scenarios on the hundreds of levers that control your financial future, and find opportunities to do better.
Stay Knowledgeable
The best way to approach retirement planning in times of change is by being proactive and informed. Gaining a sense of financial well being begins with building knowledge about how potential policy shifts could affect your savings and benefits.
- Educate Yourself on Key Policy Changes: Stay updated on proposed changes to taxes, retirement account rules, Social Security, and Medicare. Understanding how these changes could impact your retirement allows you to make informed decisions, adjust your strategy, and take advantage of any beneficial opportunities.
- Develop Your Financial Literacy: If retirement planning feels complex, consider taking time to build up your understanding of tax strategies, investment fundamentals, and estate planning. This knowledge enables you to take confident, informed steps toward securing your future.
- Work with an Advisor When Needed: Financial planners and advisors can be a valuable resource for interpreting new policies and aligning your retirement strategy with current realities. They can help explain the nuances of policy impacts and work with you to adjust your plan.
Collaborate with a CERTIFIED FINANCIAL PLANNER™ professional from Boldin Advisors to identify and achieve your goals. Book a FREE discovery session.
Run Scenarios and Create Backup Plans
Flexibility is essential during times of change. Running various retirement scenarios and developing plans for various future possibilities can give you peace of mind. You can anticipate and prepare for economic or policy shifts and other “unknown unknowns.” This approach provides a financial cushion that helps keep your retirement goals on track, even if conditions change.
Create, manage, and compare your scenarios with the Boldin Retirement Planner. Consider what might happen with income, expenses, interest rates, investment returns, healthcare costs, taxes, and more.
Explore 20 eye-opening scenarios to try with the Boldin Planner.
Plan for possible changes to inflation and related metrics
Many people are saying that the lingering impacts of inflation and economic hardship may have been a factor in the election results. However, economists are divided on what the real impact of President Trump’s proposed taxes, tariffs, and immigration will have on the U.S. economy and the financial outlook of American households.
Fed Chair Jerome Powell said the results of Tuesday’s presidential election, which paved the way for a U.S. chief executive who has pledged widespread deportation of immigrants, broad-based tariffs, and tax cuts, would have no “near-term” impact on U.S. monetary policy.
However, the near term (within the next couple of years) impact is hard to predict. Some commentators think that inflation could rebound. “Marketplace” host Kai Ryssdal spoke with Greg Ip, senior economics commentator at The Wall Street Journal. Ip said, “The two main parts of his [Trump’s] platform are higher tariffs and lower taxes. And economists will tell you that higher tariffs, all else equal, will lead to higher inflation, and that tax cuts, all else equal, will lead to more rapid economic growth and larger government deficits. And if you look at how financial markets responded to the news of the election, that’s exactly what they’re anticipating.”
No one can predict the future though. The only thing you can do is prepare for the unexpected. Run various “what if” scenarios and be flexible.
Consider Possible Long Term Tax Scenarios
The new administration is likely to have an impact on taxes, especially when it comes to the Tax Cuts and Jobs Act (TCJA).
This Act, passed in 2017 by President Trump, introduced a series of tax cuts and policy changes that are set to “sunset” (expire) at the end of 2025, meaning tax rates and some deductions will revert to pre-2017 levels starting in 2026 unless further action is taken by Congress. This would result in higher tax rates for individuals and families, a reduced standard deduction, and potential changes to other deductions and credits that impact income tax filings.
While there has been political debate about making these provisions permanent, it’s uncertain if they will remain beyond the scheduled sunset. Making them permanent would require significant fiscal considerations, as extending the TCJA cuts would add substantially to the national debt.
Many analysts have believed that the TCJA’s sunset provisions are likely to take effect as planned in 2026. But, the new administration may have other ideas.
Curious about your financial projections with or without expiration of TCJA? Use the Boldin Retirement Planner to project your future taxes with and without this act. Go to My Plan > Assumptions > Taxes and toggle between current TCJA rates and reverting to the 2017 tax rates.
Stay Focused on Long-Term Goals
In good times and bad, it’s essential not to overreact.
Election cycles can stir strong emotions and prompt people to make hasty financial decisions, but the foundation of a solid retirement plan is long-term thinking. Set long term goals and a plan for getting there. In retirement planning, short-term events—like economic shifts—matter less than the long term because retirement savings are typically invested for decades, allowing time to recover from fluctuations. Over a long horizon, compounding returns and strategic adjustments can smooth out temporary volatility, helping your investments grow consistently despite occasional downturns.
Here’s how to stay grounded:
- Avoid Market Timing: The stock market soared with the election results. However, reacting to political shifts with drastic investment changes rarely pays off. Stay focused on a balanced, diversified portfolio that aligns with your risk tolerance and retirement timeline.
- Review Your Retirement Plan Regularly: Use the election as a reminder to revisit your retirement plan annually or with major life changes. Look at your projected retirement income, expenses, and potential gaps, adjusting as needed to stay on course.
- Stay Focused on Long-Term Goals: By focusing on the bigger picture, you can avoid impulsive decisions based on short-term noise, which can lead to missed opportunities and unnecessary losses, ultimately keeping you aligned with your long-term goals for financial security in retirement.