President Trump Addresses Joint Session of Congress; How Will His Policies Affect Retirees?

President Trump Addresses Joint Session of Congress; How Will His Policies Affect Retirees?

President Donald Trump addressed a joint session of Congress on March 4th, the same day his scheduled tariffs on goods coming from Canada and Mexico went into effect. In the opening of his speech, Trump declared, “America is back,” touting the rapid pace at which his administration has implemented sweeping changes. 

Indeed, the Trump administration has acted swiftly to cut spending on government programs, crack down on illegal immigration, and eliminate diversity initiatives throughout government agencies. The two months since Trump’s inauguration have certainly been a whirlwind, and his economic policy decisions have been particularly polarizing.

With millions of Americans already struggling – especially those who are in or near retirement – a change in economic policy could bring long lasting relief, but has come with short term drawbacks. Based on the information given in his address to Congress, how will Donald Trump’s fledgling second term impact the financial prosperity of retirees? The Crash Proof Retirement® Team has an analysis of some of the points raised during his address.

Trump Defends Tariff Policies; Teases Additional Tariffs

Last month, we discussed the potential outcomes of President Trump’s newly enacted tariffs. In his address, Trump was optimistic.

“Tariffs are about making America rich again and making America great again,” said Trump to thunderous applause from Republican members of Congress. It is true that, historically, tariffs provided a crucial source of income for the federal government. Today, they could potentially bring in more income to fund government operations and programs. Although free-trade policies became the norm after the implementation of income taxes in 1913, Trump has expressed a desire to once again protect American industry and jobs by imposing high tariffs on imported goods.

Trump acknowledged the potential downsides of tariffs, saying, “There will be a little disturbance, but we’re ok with that.”

Unfortunately, Trump’s prediction has proven to be accurate as all major stock market indices have been on a steady decline in the weeks following the implementation of his new tariffs. Despite this, Trump is determined to press forward, believing it will be beneficial for Americans in the long term. In the meantime, those in or near retirement will be forced to deal with the fallout of an escalating global trade war. Those already in retirement are likely to struggle with higher prices on a range of goods in the coming year, including cars, electronics, oil, food, and more. Those who were planning to retire in the next few years may have to delay their plans due to the decreased value of their nest eggs, and retired Americans will have to cope with decreased income from their securities-based investment portfolios. With Trump announcing more tariffs starting on April 2nd, those negative effects could be amplified significantly in the coming months.

Of course, if tariff policies do ultimately spur a recovery of American manufacturing, it could lead to an economic boom that benefits retirees and Americans as a whole. 

Since the 1970s, American companies have outsourced manufacturing to foreign countries to take advantage of cheaper labor. The Trump administration hopes his tariff policies can reverse this trend, making it more cost-effective to produce goods in the U.S. If successful, this could create more jobs for Americans with better wages, especially in blue-collar industries, potentially rebuilding a strong middle class.

Tariffs could also encourage American companies to source raw materials domestically, reducing dependence on foreign countries for steel, oil, lumber, and other commodities and creating a more stable and independent economy.

Trump Praises Government Spending Cuts

Another cornerstone of President Trump’s campaign was the creation of the “Department of Government Efficiency (DOGE),” an agency tasked with cutting wasteful Government spending. Since the creation of DOGE, the jobs of more than 100,000 federal workers have been cut, entire agencies have been closed, and billions of dollars in foreign aid have been canceled. The U.S. Agency for International Development (USAID), which provides humanitarian aid overseas, has been a particular target. Secretary of State Marco Rubio stated on social media that 83% of programs funded by USAID are slated to be canceled because they, “spent tens of billions of dollars in ways that did not serve, (and in some cases even harmed), the core national interests of the United States.” Some examples of the foreign programs being funded can be found in this White House briefing.

In his speech, Trump credited DOGE with identifying and eliminating, “hundreds of billions of dollars of fraud.” The cuts spurred on by DOGE’s audits are expected to continue, and Trump also encouraged Congress to pass a sweeping $4.5 trillion plan that includes an extension of his signature 2017 tax cuts as well as $2 trillion in cuts over the next decade with education, healthcare, and social services as targets. Under this plan, any budget savings would be used to increase security at the border and fund mass deportations of immigrants. Trump and DOGE’s informal leader Elon Musk have also proposed writing $5,000 dividend checks to some 79 million taxpayers if the department’s target of $2 trillion in savings is achieved. Although a formal proposal for the so-called “DOGE Dividend” has yet to materialize, the idea has garnered strong support from American taxpayers of all political persuasions

Unfortunately for retirees, many experts have asserted that, without making up the revenue lost to tax cuts, no amount of spending cuts will be able to compensate for the shortfall. House Speaker Mike Johnson has called the idea of a $5,000 stimulus check “fiscally irresponsible” and not in tune with the conservative brand. Other Congressional Republicans have argued that any savings should be used to reduce the deficit. 

Although Trump has repeatedly stated that cuts to Medicare, Medicaid, and Social Security are not on the table, voters are still concerned that their benefits could be cut. Elon Musk told Fox Business Network, “Most of the federal spending is in entitlements. That’s the big one to eliminate.” These comments, along with his previous assertion that $500-700 billion needs to be cut from these programs signal a willingness to enact changes that could reduce Medicare and Social Security for millions of retirees. With Trump’s desire to extend and increase tax cuts while simultaneously redirecting spending to fund stimulus, border security, and deportations, it seems likely that retirees could see their benefits reduced in the near future. On the other hand, reduced taxation could put more money in retirees’ pockets that they could use to cover their daily expenses.

A Crash Proof Retirement® for an Uncertain Future

As is often the case when a new presidential administration takes the reins, the future is currently unclear. Trump’s policies regarding tariffs, taxation, the social safety net, and more are certain to affect retirees and their ability to have a happy and healthy retirement. At Crash Proof Retirement®, we have developed a system designed to benefit retirees regardless of the economic climate.

The vehicles used in the Crash Proof Retirement® System are proven to prevent the loss of your principal investment, even when the stock market crashes. Because these vehicles are based in the financial life insurance industry, rather than the risky securities industry like stocks, bonds, and mutual funds, they are not subject to the same ups and downs as securities-based investments. In times when the economy is declining, these vehicles prevent the loss of principal as well as any interest that has already been credited. When the economy is strong, they can achieve double-digit growth similar to securities-based vehicles.

The Crash Proof Retirement® System also comes with built-in inflation fighters that allow you to take additional income with no penalties and without depleting your nest egg. With the prices of a range of goods set to rise over the next few years, these inflation fighters can be the lifeline a retiree needs to cover expenses like groceries and medical bills.

If you are interested in learning how to protect your nest egg from the potential fallout of tariffs, budget cuts, and other policy decisions, it’s time to schedule your financial checkup with Crash Proof Retirement. This checkup is provided at no cost to you, and the information you learn from our licensed Retirement Experts is certain to change the way you think about financial planning in Bucks County and surrounding communities. Call 1-800-722-9728 to schedule your financial checkup today!