President Trump has employed people, had companies set up with retirement plans and many people employed by him are living off his companies’ retirement packages. Certainly, he has kept these things in mind while settling into the White House, but his tax plan is what people nearing retirement should really consider and base their expectations on.
The challenge is that – even with weeks of being a fairly active executive, we’re still largely unsure of the type of president we have elected. Here are a few theories on what people getting ready to retire should consider and expect from Trump’s first four years in office.
The repeal of the estate tax is extremely popular, but laws concerning your estate take effect when you die, not when you draft it. It is important not to wait to plan your estate – particularly your will and life insurance. But don’t be too surprised if you find yourself amending your plans in two or three years to plan for potential changes in tax policy.
It may be prudent to wait before finalizing the gritty details of your estate plan, such as trusts or business succession plans. As far as immediate estate planning, put a plan in place that provides dispersion and alternatives for how it is handled now and if changes are made after death.
According to David Carrier, it is highly likely the election will affect estate planning in Michigan, if not nationwide. Any changes to estate taxes are unlikely to significantly affect probate law in any one state.
President Trump has promised to defend Social Security benefits. There is a vagueness to his plan, but people getting close to retirement age — which is the age they can begin receiving Social Security benefits — to get the most out of their benefits because there probably will be no major changes happening.
Do not rush to take it though. It is possible to see a benefit decrease because of his promise to put a freeze on federal hiring, but because of his tax plan, the cost of living would easily accommodate any changes. The freeze on government hiring should not be too alarming. There was a hiring freeze for Social Security during the entire Obama administration.
Again, this is just assuming there are going to be changes, which appears to be unlikely.
Trump and the GOP Congress intend on repealing and replacing Obamacare. It has been agreed the repeal will not take place without a replacement, which would cover anyone. President Trump has stated multiple times he wants people to have access to HSAs (Health Savings Accounts), which are medical savings accounts that are tax-free and defray medical costs. He also wants citizens to be able purchase insurance across state lines.
The Affordable Care Act has hit middle America hard, including people nearing retirement. Premiums have increased beyond affordability for many in the lower-middle class, and insurance companies and doctors have voiced concern and left the marketplace. It is not sustainable, so a replacement is necessary.
All elections can polarize and stir emotions, but the election of President Trump has done so more than ever. Dramatic political swings can prompt investors to act impulsively. If you are currently planning and saving for retirement, continue to be the tortoise and not the hare.