6 Ways the New Trump Administration Could Impact Your Retirement
A new Trump administration could bring changes to Social Security, Medicare, and tax policies, impacting retirement planning, healthcare costs, and financial regulations for retirees.
What will the reelection of Donald Trump mean for your retirement security?
It’s too early for predictions, as we don’t know what the new administration’s policy priorities will be or how Congress will respond. But I’ll be watching a number of retirement policy issues concerning Social Security reform, Medicare privatization, threats to prescription drug cost protections, and more.
Steps that the new administration and Congress might take in any of these areas could have a major impact on the retirement landscape. So let’s read the tea leaves.
1) How Will Trump Address Social Security Solvency?
Though Trump hasn’t released an explicit plan for addressing Social Security’s looming solvency problem, the clock is ticking.
Social Security’s combined retirement and disability trust funds are on track to be depleted in 2035, according to the program’s trustees. Social Security expenses have been outpacing noninterest revenue since 2010, mainly because of low birthrates that translate into a declining ratio of workers paying into the program while more people are drawing benefits. If the reserves are exhausted, current workers’ payroll tax contributions would only be enough to pay 83% of the benefits promised to current and future beneficiaries.
So how will Trump address trust fund exhaustion? To date, he has said he will not cut Social Security benefits, but that he would address the solvency question through faster economic growth. The implication: If workers earn more income, they’ll pay more into the Social Security system. That is not a realistic solution—even 50% growth in real wages would only delay Social Security’s insolvency date by one year.
Meanwhile, several of Trump’s campaign proposals, when taken together, would hasten the insolvency of the retirement and disability trust funds by as much as three years, according to the Committee for a Responsible Federal Budget.
Those proposals include eliminating taxation of Social Security benefits paid by higher-income beneficiaries; ending taxation of overtime and tips; and restricting immigration and imposing stiff tariffs on imported goods.
Immigration restrictions would reduce the number of workers paying into the Social Security trust funds, and tariffs would either increase cost-of-living adjustments through higher inflation or reduce taxable payroll owing to reduced economic activity.
Project 2025, the governing blueprint developed for the new administration by the Heritage Foundation, does not address Social Security reform directly. However, the foundation supports boosting the retirement age to 69 from 67, with further increases indexed to US life expectancy—as do many Republican members of Congress.
Some legislators are already signaling that they’d like to address Social Security reform sooner than later, so stay tuned.
2) Will Trump Embrace Further Medicare Privatization?
Medicare is our largest government-sponsored health insurance program, but substantial parts of the program have been privatized. Part D prescription drug and Medigap supplemental plans are offered exclusively by private insurance companies.
Medicare Advantage, the commercial alternative to traditional government-sponsored Medicare coverage, competes for enrollment with the traditional plan and now accounts for over half of total enrollment. At this rate, Medicare Advantage is expected to cover 64% of beneficiaries by 2034.
That growth stems, in part, from compelling marketing promises of simplicity and lower premiums. Advantage plans often come with prescription drug coverage baked in, and there’s no need for a separate Medigap policy. The plans also tout “extra benefits” that can include dental, vision, and hearing coverage, as well as gym memberships.
Advantage has supporters in both political parties, but there are signs that the shift toward privatization could accelerate during the second Trump administration, as Project 2025 calls for making Advantage the default option for new enrollees, and Dr. Mehmet Oz, who has been nominated to run the Centers for Medicare and Medicaid Services is an enthusiastic proponent.
As the leader of CMS, Dr. Oz could not eliminate traditional Medicare by fiat. But CMS could tip the scales in Advantage’s favor through any number of rule changes.
For example, CMS could soften (or even abandon) Biden-era rules that crack down on deceptive advertising practices by Advantage plan marketers. The new administration also could back off from ongoing battles between CMS and insurance companies over rules that govern how they are paid for covering Medicare enrollees. These include bonus payments tied to plan quality, risk adjustment, and diagnoses.
But there are several reasons to approach Advantage plans with caution:
Advantage plans utilize networks of providers that can—and do—shift over time, which can destabilize your care.
Very little is known about the quality of care received by Advantage enrollees who have serious illnesses. However, serious illness is a common motive for attempting to leave an Advantage plan, according to many Medicare advocates and counseling services.
Federal rules don’t require Advantage plans to disclose data about care in the same way that participants in traditional Medicare must do.
Relatively high disenrollment rates have been reported among enrollees in poor health and among those living in nursing homes or using post-acute services. Disenrollment rates also are high in rural areas, where it can be difficult to access care in plans with limited benefits and restrictive provider networks.
Nearly all Advantage plans have prior authorization requirements that can tie up your care in bureaucratic red tape. Outright denial of care is another problem: Federal investigators have found that Advantage plans had a pattern of inappropriately denying patient claims.
Traditional Medicare is still the gold standard of coverage. It allows you to visit nearly any healthcare provider in the US, a feature that has become extremely hard to find in any health insurance plan, including the Advantage network.
And, coupled with a Medigap supplemental plan, traditional Medicare will provide the best protection against out-of-pocket costs. If you have traditional Medicare and a Medigap plan, you have virtually full protection for Medicare-covered services (with minimal paperwork); if you are in Medicare Advantage, you carry the risk of additional cost up to your plan’s annual out-of-pocket limit.
3) Will Trump Pursue Changes to Recent Prescription Drug Reform?
One of the most important Biden administration legislative achievements is the Inflation Reduction Act. The law contained important reforms to Medicare’s Part D prescription drug coverage that will protect millions of seniors who experience high drug costs for serious illnesses and chronic diseases. It capped out-of-pocket spending at $3,300 in 2024, and the final step is a $2,000 cap beginning in 2025. It also caps the cost of insulin for Medicare enrollees at $35 per month, along with other cost-saving measures.
Any Trump administration effort to repeal those protections would meet with stiff resistance. Project 2025 does call for repealing the provision of the Inflation Reduction Act that empowered Medicare to negotiate drug prices with pharmaceutical companies. That provision is tied directly to the new cap, since Medicare expects to recoup some of the higher cost of covering seniors through negotiated savings.
4) Will Trump Attempt to Roll Back the Affordable Care Act?
The Affordable Care Act is not a retirement benefit program, but it does provide an important coverage bridge to Medicare for older adults who have not yet reached age 65 and don’t have employer-sponsored insurance. This year, 24% of Americans enrolled in a marketplace plan were aged 55-64, making it the largest single age category, according to government data compiled by KFF.
During the first Trump presidency, Republicans held dozens of votes attempting (unsuccessfully) to repeal the ACA.
Another attempted repeal is possible but politically risky: The ACA currently insures more than 45 million Americans and has gained popularity with the public over the years. Sixty-two percent of all adults had a favorable view of the law in April this year, compared with just 38% in April 2016, according to KFF polling.
Short of full repeal, the new administration and Congress could roll back the ACA’s expansion of Medicaid for low-income people. And it could increase premium costs for millions of people by doing absolutely nothing. Temporary premium subsidies were added to the program as a coronavirus pandemic relief measure under the American Rescue Plan Act in 2021 and extended through the end of 2025 by the Inflation Reduction Act. The subsidies have reduced the cost of coverage substantially and boosted enrollment. If the subsidies are not renewed, premiums would double or more for people with policies in 12 states who enrolled through the federal exchange.
5) Will Trump Dump the DOL Fiduciary Rule?
The Trump administration could roll back the Department of Labor’s fiduciary rule that protects investors’ best interests around IRAs.
Money that you save in a 401(k) is protected by the fiduciary protections of the Employee Retirement Income Security Act, which has been in place since 1974. But IRAs fall outside that rule because they aren’t managed by employers, and they hold more money than defined-contribution plans ($14.5 trillion versus $11.3 trillion as of second-quarter 2024, according to the Investment Company Institute).
That’s where the DOL’s recently finalized fiduciary rule comes in. The rule requires more financial professionals to act as fiduciaries when they advise people on investments that roll over from workplace plans to IRAs. Retail investment in securities is already covered by a “best interest” regulation adopted by the SEC, but this new rule adds fiduciary duty for advice on investments in other areas, like commodities and real estate.
The rule took effect in September, although it faces ongoing litigation challenges, and some of its requirements don’t kick in until September 2025.
The first Trump administration unplugged an earlier fiduciary standard that had been promulgated by the Obama administration, and DOL officials have acknowledged that the new rule could face a similar fate.
That would leave retirement investors facing potentially conflicted, suboptimal investment advice from advisors on rollovers—and less transparency on fees and costs associated with investment products.
6) What Will Trump’s Tax and Economic Policies Mean for Retirement?
Changes to tax policy under the Trump administration and the macroeconomic environment could also have implications for retirement planning.
The current income tax rates under the Tax Cuts and Jobs Act of 2017 expire at the end of 2025. A decision to extend those cuts, deepen them, or allow them to expire (which seems unlikely) would have implications for investors’ decisions about how to use traditional tax-deferred retirement savings accounts versus Roth IRAs, and for Roth conversions. Any changes would also have an impact on taxes paid on drawdowns.
Certainly, an extension of the TCJA rates would reduce or eliminate any need to speed up moving money out of tax-deferred IRAs.
Additionally, many economists think that Trump’s proposed tariffs and immigration restrictions will spark a new round of high inflation that could erode retirees’ standard of living.
The silver lining? I guess we can look forward to some really large Social Security cost-of-living adjustments.