The upcoming 2024 elections are expected to have a significant impact on retirees, particularly in light of the Social Security shortfall and other retirement planning issues. The outcome of the election could shape the future of Social Security funding and benefits. As retirees prepare for potential changes, it is crucial to stay informed and proactive in managing their retirement plans.
Brandon Ashton, director of retirement security at Cornerstone Financial Services in Southfield, Michigan, emphasizes the importance of the 2024 election for retirees. He highlights key issues such as tax legislation, pension reforms, retirement age, and healthcare costs that will be impacted by the election.
Experts advise retirees to monitor five key areas as the election unfolds and take steps to secure their financial future, regardless of the election outcome.
1. Prepare for changes to Social Security
With the Social Security trust fund running low, potential benefit cuts could be on the horizon by 2033. The outcome of the election will play a significant role in determining the future of Social Security funding and benefits. It is essential for retirees to be prepared for potential changes that may impact their retirement income.
According to Michael Primavera, retirement planning advisor at Daniel A. White & Associates in Lewes, Delaware, Congress may delay addressing the Social Security funding issue, making it challenging to implement lower-cost solutions in the future.
What you can do: To mitigate potential benefit reductions, retirees should consider saving and investing more towards their retirement. Making financial adjustments now can help secure a stable financial future.
2. Adjust for potential changes to income tax rates
The expiration of the Trump tax cuts in 2025 is expected to be a contentious issue. Both candidates have proposed changes to the tax system, including adjustments to tax rates for individuals and corporations. Retirees should be proactive in tax planning to minimize the impact of potential tax rate changes.
What you can do: Smart tax planning can help retirees minimize their tax liabilities. Understanding your income sources and tax brackets is crucial for effective tax management.
3. Consider a Roth IRA conversion
Given the potential rise in tax rates, a Roth IRA conversion may be a strategic move for retirees. Converting traditional retirement accounts to Roth IRAs can offer tax advantages and long-term financial benefits.
What you can do: Consider a Roth IRA conversion as part of your retirement planning strategy. Consult with a financial advisor to assess the benefits of this conversion based on your individual circumstances.
4. Watch out for changes to estate taxes
With the expiration of the Trump tax cuts, estate tax laws are expected to change by the end of 2025. Retirees should stay informed about potential adjustments to estate tax exemptions and consider gifting strategies to optimize tax savings.
What you can do: Discuss estate tax planning with your financial advisor to explore strategies that align with your long-term financial goals.
5. Don’t abandon your long-term game plan
Regardless of the election outcome, it is essential for retirees to stick to their long-term investment and retirement plans. Avoid making impulsive decisions based on short-term market fluctuations or political changes.
What you can do: Stay focused on your long-term financial goals and work with a financial advisor to navigate market volatility and make informed investment decisions.
Bottom line
Retirees should stay informed and proactive in managing their retirement plans amidst potential changes brought about by the 2024 election. By making well-considered decisions and working with experienced financial advisors, retirees can secure a stable financial future for themselves and their families.
Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. Past performance is not indicative of future results.