As President-elect Donald Trump prepares for his second term, many are watching how his campaign promises will affect their wallets. For Gen X voters, this means navigating economic changes that affect their taxes, retirement savings, caregiving and homeownership.
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“Under the Trump presidency, Gen X should expect a continuation of policies focused on tax cuts for businesses and individuals, particularly the wealthy,” said Christopher Stroup, CEO and founder of Silicon Beach Financial. “These policies aim to stimulate investment and economic growth but may lead to higher deficits and less government spending on social programs. This could impact Gen Xers who are reliant on Social Security, healthcare and other public services.”
As the Trump economy begins, here are the four money moves Gen X should make before Inauguration Day.
Reconsider Your Investment Strategy
With potential changes to Social Security and tax laws in the next decade, Gen X should evaluate their investment strategies to prepare for future uncertainties.
“The need to work longer or delay claiming Social Security benefits could affect their retirement timeline and require more savings or a shift in investment strategy to compensate for the potential shortfall in expected benefits,” Stroup said.
He suggested the following adjustments to savings and investments to address possible shortfalls in benefits:
- Adapt Your Savings Approach: If Social Security benefits are reduced or delayed, consider saving more aggressively in IRAs or 401(k) plans to maintain your desired retirement lifestyle.
- Diversify Your Portfolio: Mitigate market volatility by spreading investments across asset classes such as stocks, bonds, real estate and commodities. Diversification helps buffer against downturns in specific markets.
- Prepare for Tax Reforms: Maximize contributions to tax-advantaged accounts like IRAs, 401(k) plans and HSAs before any potential tax law changes take effect.
These adjustments can help you navigate economic uncertainties while staying on track with your long-term financial goals.
Learn More: 5 Things Boomers Should Do With Their Money Now That Trump Will Be President
Maximize Your Retirement Contributions
Stuart Schiffman, founder of Compound Wealth Advisors, said Gen X should be prepared for significant shifts in economic policy that could lead to reduced federal spending that could hit lower- and middle-income earners the hardest.
However, Schiffman said Gen X is entering their peak earning years and should take advantage of retirement savings opportunities. For example, he recommended:
- Taking Advantage of Catch-Up Contributions: If you’re 50 or older, you can contribute an additional $7,500 to retirement accounts like 401(k) plans, with even higher limits for those aged 60-63 starting in 2025.
- Considering Roth Contributions: For those who qualify, Roth IRAs provide tax-free withdrawals in retirement, offering flexibility and potential tax savings.
- Optimizing Health Savings Accounts: HSAs offer a unique triple tax advantage — pre-tax contributions, tax-free growth and tax-free withdrawals for qualified medical expenses — making them a powerful tool for retirement planning.
Adopt Tiny Tweaks
While most money management advice geared towards Gen X focuses on savings, retirement and investing, small lifestyle changes can make a huge difference.
“Even tiny tweaks, like swapping one takeout order for a home-cooked meal each week or using a browser extension to earn rewards as you shop online may seem little, but they build up over time and can seriously help you earn extra cash,” said Trae Bodge, a retail, smart shopping and money-saving expert.
Plan Your Next Housing Move Wisely
During the presidential campaign, Trump promised to promote homeownership through tax incentives and boost housing supply by reducing zoning regulations.
Laura Russo, vice president and senior wealth and fiduciary planning analyst at Wilmington Trust, said Gen Xers looking to buy a home should evaluate its impact on cash flow and spending.
“It’s important to remember that home-related expenses do not stop with the mortgage payment,” Russo said. “Home maintenance can be just as expensive, particularly if there is an unforeseen repair that is required. For those thinking of selling a home, consider the potential tax implications of selling property that may have greatly increased in value over the years.”
Editor’s note on political 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: The Trump Economy Begins: 4 Money Moves Gen Xers Should Make Before Inauguration Day
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