The Trump Economy Begins: 4 Money Moves Retirees Should Make Before Inauguration Day

Commitment to Our Readers

GOBankingRates’ editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services – our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.

20 Years
Helping You Live Richer

Trusted by
Millions of Readers

A change in presidential economic policy generates curiosity and concern about the direction and flow of interest rates or which economic sectors could flourish under the upcoming administration.

“As advisors, we train our clients to think long-term and expect the historic volatility associated with investing in the stock market,” said Stuart A. Schiffman, founder and managing partner of Compound Wealth Advisors. “But we don’t prepare them for ‘black swan’ events. We could be poised to experience something out of the historical norm.”

As the Trump economy begins, here are four money moves retirees should make before Inauguration Day.

Manage Your Tax Burden

The Tax Cuts and Jobs Act, which President-elect Trump signed during his first term in 2017, was set to expire in 2026. However, Trump said during this year’s presidential campaign that he would extend the legislation, which would lower tax rates.

“What this means for retirees is that the tax-deferred dollars they are living on will last them longer than if the government taxed it at higher levels,” said Joe Schmitz Jr., founder and CEO of Peak retirement Planning. “Additionally, with the standard deduction being double what it was in 2017, less of our income is taxable under the legislation.”

If you still have some income — like from a part time job or side gig — Schmitz recommended contributing to a Roth IRA. The contribution limit is $8,000 for those age 50 and older.

“This is an opportunity to take advantage of tax-free growth opportunities, which will lessen your tax burden,” Schmitz said. “If you have tax-deferred retirement accounts, it may make sense to work with a financial advisor and begin doing some Roth conversions in order to pay taxes now and [take] advantage of tax-free growth from that point forward.”

Adjust Your Monthly Budget

Trump proposed imposing at least a 10% universal baseline tariff on imports during his second term. According to the nonpartisan Tax Foundation, a 10% universal tariff would increase taxes on American households by an average of $1,253.

“Tariffs typically drive up the cost of goods and services,” said Paul Tyler, host of “That Annuity Show.” “This could have a meaningful daily impact for retirees living on a fixed income. The best approach right now is to tighten the belt and conserve precious savings.”

Tyler also recommended that retirees talk to their financial advisors to update their retirement plans.

“Now would be a good time to get help thinking through how to conserve savings,” Tyler said. “A dollar may not last as long as we all thought just a few years ago.”

Play Defense

Schiffman also said he advised his clients to “play defense.”

“I am reducing the volatility of the portfolios I manage,” Schiffman said. “I am increasing short maturity bond allocations while taking profits in certain stock sectors like big cap technology growth stocks.”

Schiffman said he encourages individual investors to buy TIPS (Treasury Inflation-Protected Securities) and I-bonds, a U.S. Savings bond designed to protect your investment from inflation.

“The last thing you want to do is sell stocks in a down market to meet your income needs,” Schiffman said. “Be sure to allocate your savings and investments between three buckets: short, intermediate and long-term, based on your future income needs.”

Think Long-Term

Dan Casey, founder at Bridgeriver Advisors, said there could be gains if Trump acts on his campaign promises of deregulation and lower corporate taxes, which could lead to increased business investments and potential growth.

However, there are also risks.

“It’s likely international holdings will be under pressure due to the possibility of tariffs,” Casey said. “Also, perhaps an overweighting of small cap companies should occur, as they are less likely to be affected by tariffs and tend to do better in a decreasing interest rate environment, due to the variable interest loans they tend to have.”

Overall, Casey recommended that investments be held for the long term.

“A presidential term is a very small window in regard to how long you should hold onto stocks when investing,” Casey said. 

Editor’s note on political 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.