Retirement Planning Under Trump: Money
This post will be part of an ongoing series that reports on the changes President Trump, his Cabinet and Congress will make over the next 4 years and which ones directly effect your retirement.
Today on RetireWire we rounded up what the top financial advisors, publications and experts are saying about retirement planning under a Trump Administration. In our efforts to provide the best retirement information out there, a well-thought-out retirement plan will be your best security against any surprises in the market or Washington.
We will continue to share the latest reports on forthcoming changes to tax rates, capital gains, medical care, social security and more.
- For high earners ($500+k/year) who max out their allowed 401(k) contributions early in the year, consider "tax diversification". The highest federal income tax rate on salary is now 39.6%, and Trump wants to cut it to 33%. If he succeeds, consider it an opportunity to build up your Roth stash. There is no tax deduction for contributing to a Roth IRA, but all withdrawals in retirement are tax-free. If your overall tax rate will be the same or higher in retirement, Roth has the edge. But if, for example, you live in high-tax California or New York now and plan to relocate to income-tax-free Florida or Nevada for retirement, your combined tax rate will likely go down.
- Be prepared; If you are, you may be able to enjoy the retirement of your dreams because you planned ahead. There are many people who find themselves retiring sooner than they expected, due to job loss, employment issues or poor health. Stay on top of your networking, professional skills, savings and health. With all 4 in great shape, you'll ease into the retirement you always wanted.
- Be more attentive than ever in finding a trustworthy financial adviser. Since anyone can call themselves an adviser, wealth manager or retirement planner, you want to look for a professional that will work in your best interest, called fiduciaries. This is a specific legal term that means they are obligated to put your financial interests above those of their firm. Ask for their credentials and a signed fiduciary oath before working together.
- Almost immediately after Donald Trump was inaugurated, the Dow Jones Industrial average hit its all time high, north of 20,000 points for the first time ever. This led to a lot of speculation about the market being bullish in response to a Trump presidency. While this was exciting news, it is important to remember that the Dow Jones only represents 30 large capitalization stocks. It is important to keep a overarching understanding of the state of the economy, which can come from looking at the S&P 500, the Russell 2000, and the Nasdaq indexes. For those who are planning to retire, it is imperative to focus on the fundamentals and technicals that they are comfortable with, instead of getting caught up in any hype.