A change in the president’s economic policy brings curiosity and concern about the direction and flow of interest rates or which sectors of the economy are likely to thrive under the incoming administration.
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“As advisors, we teach our clients to think long term and anticipate the historical volatility associated with investing in the stock market,” said Stuart A. Schiffman, founder and president of Compound Wealth Advisors. “But we do not prepare them for ‘black swan’ events. We may be ready to see something out of the ordinary.”
As the Trump administration takes off, here are four money moves retirees should make before inauguration day.
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The Tax Cuts and Jobs Act, signed by President Trump during his first term in 2017, would expire in 2026. However, Trump said during his presidential campaign this year that he would extend this law, which would reduce taxes.
“What this means for retirees is that the tax-deductible dollars they’re living on will last longer than if the government were paying higher taxes,” said Joe Schmitz Jr., founder and CEO of Peak Retirement Planning. “Also, with the standard deduction being double what it was in 2017, less of our income is covered under the law.”
If you still have some money — like from a part-time job or side gig — Schmitz suggested donating 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 reduce your tax burden,” said Schmitz. “If you have tax-deferred accounts, it may make sense to work with a financial advisor and start making a Roth conversion to pay taxes now and [take] the opportunity to grow tax-free from then on. “
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Trump has proposed a 10 percent global tax on imports for the second time. According to the nonpartisan Tax Foundation, a 10% global tax would increase taxes on American households by an average of $1,253.
“Tariffs tend to raise the cost of goods and services,” said Paul Tyler, producer of “That Annuity Show.” “This can make sense on a daily basis for retirees living on fixed incomes. The best way now is to buckle up and save a lot of money. “