Every presidential election, Americans wonder what their lives will be like for the next four years. They worry about critical issues like immigration, civil rights, the environment and the economy. While the commander-in-chief can’t single-handedly control the country’s destiny (thanks to the legislative and judicial branches of the government), their policies can play a significant role in determining the nation’s overall direction.
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We asked Stephan Shipe, certified financial planner and owner of Scholar Financial Advising, about former President Donald Trump’s financial plans for 2025 and what they may mean for Americans should he regain the presidency. Read on to see what the expert had to say.
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Inflation is primarily determined by the Federal Reserve’s actions and overall economic conditions. However, how Trump handles things like energy policy, industry regulations, taxes and tariffs could have a major impact on the cost of goods.
“Decreased consumer prices due to a change in energy policy or decreased regulation would likely lead to higher equity and overall economic growth, but we’d need to be careful that this is not combined with an increase in government spending as this could have the opposite effect by overheating the economy and leading to even higher inflation numbers. Rampant spending by either party is a risk that the candidates should not be willing to take,” Shipe said.
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“Assuming [Trump’s previous] tax cuts are continued, it will be easier for investors to make long-term plans regarding their annual income and estate tax liability,” Shipe said.
But what about taxpayers just trying to make ends meet?
While Trump’s previous tax cuts (set to expire at the end of 2025) benefit wealthy Americans, they don’t necessarily shift the burden to low-income earners. If Trump wins the election and renews his 2017 Tax Cuts and Jobs Act (TCJA), the tax liability of the poorest Americans would remain unchanged or decrease.
Social Security is a hot topic among voters as many want to know how the problem of the fund running out of money will be solved.
“Based on current plans, there is not likely to be a decrease in current Social Security spending or an increase in benefit age. This will benefit cash flow planning for individuals looking to retire, but this is not a sufficient long-term solution,” Shipe said.
“There are many ways to impact the solvency of the Social Security system, including a change in the Social Security income cap, the amount of Social Security tax, or the Social Security bend points. These could all be adjusted without impacting [retirement] age or current benefits,” Shipe said.
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“Market returns in times of political uncertainty are choppy,” Shipe said.
Therefore, it’s important to brace for potentially rapid shifts in investment performance.
“Investors should take this time to think long-term about their portfolio goals and build an asset allocation that matches their willingness and ability to take risks regardless of who wins the election. Taking advantage of volatility with tax loss harvesting and appropriately timed Roth conversions is also something to watch,” he added.
The housing market under Trump could see lower interest rates and tax breaks, fueling sales and refinances. However, the increased demand coupled with a persistently low supply would likely mean prolonged elevated property prices.
If Trump retakes office, the job market could benefit from the continuance of the TCJA because businesses may have more money to hire workers. Unemployment is likely to remain low. However, while fewer immigrants in the country (due to stricter immigration policies) could mean more opportunities for American citizens, companies may experience agricultural employee shortages.
What You Can Do
Some economists note that the election is unlikely to impact your money situation in some key areas — particularly when it comes to long-term investing and financial planning. However, as a best practice, you may want to take steps to strengthen your financial house overall before the election.
For example, experts advise Americans to bolster their emergency savings and diversify their investments. Increasing your emergency fund by just $50 or $100 per month could boost your confidence that you can handle whatever life (or the new administration) throws at you.
In addition, if you expect money to be tight in 2025 due to continued inflation or another cause, there are things you can do to stretch each dollar. For instance, you could buy second-hand items, prepare meals at home or explore free hobbies, like reading books from the library. You could also pick up a side hustle to give your budget extra breathing room.
Editor’s note on election 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.
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This article originally appeared on GOBankingRates.com: I’m a Financial Planner: Trump’s Financial Plans for 2025 and the Biggest Possible Changes for Americans…Read more by Laura Gariepy
