There are unresolved questions and concerns anytime our country experiences a change in administration. The current election has left even more questions unanswered than in years past. With a businessman in the driver’s seat determined to stir things up, our financial future is uncertain.
Trump’s Social Security plan revolves around making changes to the individual and corporate tax structure in order to boost the growth of the U.S. economy. Trump believes faster growth should lead to rising wages and thus an increase in payroll tax collection. Millions of people aren’t convinced that his strategies will prove effective.
Note: Given the ever changing environment that surrounds the Trump Presidency and the fact that the President will need to work with legislation to make significant changes, what is “unveiled” and what is actually “real” maybe very different. This article contains general information and does not represent trading advice.
How do you anticipate Social Security (SS) to change with the new administration?
SS has been on a track to insolvency for some time. And the only thing that fixes that is more income, in the form of higher SS taxes and less outcome in the form of SS benefits. If the new administration is serious about fixing this, they should take a staggered approach.
Should we be adjusting our financial portfolio to prepare for possible changes?
If you are in your 30’s and 40’s, count on a smaller SS benefit (or none at all if you are very concerned). People in their 50’s and beyond will probably see very little change in their benefits. There might be changes to payroll taxes etc, but the details are still yet to be determined, if any at all.
If I have been planning to retire within the next year or two, and I meet the minimum financially to do so, should I hold off right now given the change in administration?
Deciding when to take your social security benefits is one of the most complicated elements of a retirement plan. A Basic rule of thumb is if you expect to live a lot longer than age 77 then waiting might be best. If you think you will die much earlier, than taking it earlier would benefit you.
There are entire books written on the subject. Bottom line; regardless of Administration, when to take SS needs to consider many different facets and should be based on an individual’s specific circumstances. Are you single or married? What is the life expectance for your family? How much have you already saved for retirement? These are all important factors that weigh more on the decision than who is in the White House.
With impending changes to health care for thousands, how can people with chronic conditions better prepare for health issues long term?
It is not entirely clear how President Trump’s proposed healthcare reform will work since its details have not been proposed.
According to a CNN money article, “They would set up a two-track system: one for those who maintain continuous coverage and one for those who don’t. And they would replace the subsidies with a tax credit or deduction to help people pay their premiums. Those who are currently covered could not be dropped from their plans or fail to renew them because they are sick, according to a proposal to reform health care outlined in Ryan’s ‘A Better Way‘ paper released in June.”
This would also apply to those switching from work-based plans to the individual market. If you are currently only covered under Obamacare, it would be prudent to talk to you doctors to see what options might be available in case you are not covered in the new program.
If Trump does as he says he will and closes borders and limits trade with China, how might that financially affect our portfolios?
China would experience substantial economic change if Trump’s policies come to fruition. We (the U.S.) are the largest destination for Chinese exports, accounting for ~18% of all Chinese exports. To maintain trade relations with the U.S., the Chinese government will likely have to make concessions.
Even a short-term contraction in China’s GDPcould result in widespread corrections in global markets. Attempts to reduce the US trade deficit under Trump’s policies will likely benefit U.S. workers and bolster GDP growth, at least in the short term. The long term ramifications resulting from a dramatic policy shift to economic independence from one of globalization are debatable and more importantly, unknown.
What financial positives do you see with the new administration?
If tax cuts and new infrastructure spending happens, that could boost US growth and the strength of the dollar. Reduction of the regulations that have cost over $1.2trillion per year would help businesses reinvest. Lowering the cost of energy would provide more spending dollars to everyone in the economy.
If we can increase exports and decrease our imports will affect GDP positively. Adding competition and choice to the market and economy tends to help be a financial positive.
I am interested in purchasing a second home. Is now a good time to purchase real-estate?
Regardless of the administration. Interest rates have been very low for a very long time. The FED has forecasted several interest rate hikes and this will make mortgages more expensive and most 2nd homes are not paid for in cash. So from an interest rate standpoint, it would be prudent to think that rates would be going up and therefore you can get more house four the money now versus years from now.
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