In This blog will explore how a Trump Victory in 2024 could impact your retirement savings in various aspects, such as ESG funds, trade war, tax reform, and the bond market.If you plan to retire in the next few years, you might be wondering how the outcome of the 2024 presidential election could affect your retirement savings.
While no one can predict the future with certainty, some clues and trends can help you prepare for different scenarios. We will also provide tips and strategies to help you navigate the potential changes and challenges that could arise under a second Trump term.
The SECURE Act: Trump’s First-Term Legacy for Retirement Savings Under a Trump Victory in 2024
The SECURE Act, which became effective on Jan. 1, 2020, was the most notable achievement of Donald Trump’s presidency regarding retirement savings.
The bipartisan law enhanced the retirement outlook for Americans by allowing tax-advantaged IRAs for people of any age, facilitating annuities in 401(k)s, simplifying the process for small businesses to offer plans to their employees through pooled arrangements, giving tax credits to small businesses that automatically enrolled their workers and increasing the age for required minimum distributions (RMDs) from 70½ to 72.
As Trump seems to be heading toward a certain nomination for a second term after dominating the Republican primaries, here’s what could happen to your retirement savings if he wins the election in November under a Trump Victory in 2024.
ESG Funds: A Target for Trump’s Regulatory Agenda Under a Trump Victory in 2024
Trump made his opposition to ESG investing clear in a campaign video he released in early 2023. ESG stands for environmental, social and governance, and fund managers use ESG criteria to assess a company’s sustainability and social impact before investing in their stocks.
The issue has become a political flashpoint likely to spill into the upcoming elections. Last year, 25 states controlled by Republicans sued the federal government, arguing that allowing retirement advisors to use ESG criteria violated the impartiality clauses in the Employment Retirement Income Security Act and Administrative Procedure Act, which govern retirement plans.
A judge dismissed the lawsuit and upheld the Biden administration’s rules favouring ESG investing.
When he was in office, Trump had imposed restrictions on ESG investing in retirement plans, affecting 150 million investors and $12 trillion worth of capital. The Biden administration reversed the rule, which led to the lawsuit.
If Trump gets re-elected — especially if the GOP wins both houses of Congress — you can expect ESG investing in retirement funds and pensions to face severe regulation or outright bans under a Trump Victory in 2024. Trump wrote in his campaign video, “We MUST protect Americans from Radical Leftist ESG investments — I did it once, and it’s time to do it again as I set the example for Republicans across the country to follow my lead in fighting ESG!”
Trade War: A Risk Factor for Stock Market Stability Under a Trump Victory in 2024
A prolonged trade war with China was one of the defining features of Trump’s presidential term. Trump used tariffs as his weapon, which, according to a Forbes report from then, mostly shifted the higher cost of imports to American consumers.
Forbes — which media bias watchdog AllSides rated as “centre” — explained how China’s retaliation to American tariffs caused stock market chaos. When Trump imposed a 10% tax on almost all the $540 billion in goods the U.S. imports from China yearly, China responded by “weaponizing” its currency and halting agricultural purchases as it prepared for a long battle.
Forbes wrote, “The markets don’t like this since there is a high chance of a recession within the year if this trade war heats up.”
The previous time China had devalued its yuan, the S&P 500 plunged by 3.57% in one day. That was in August 2019, and the looming COVID-19 pandemic soon made those predictions irrelevant. But a second Trump term could test them again, as he has publicly promised to resume his trade wars with more tariffs on more countries under a Trump Victory in 2024.
Tax Reform: Trump’s Second-Term Plan for Corporate Taxes Under a Trump Victory in 2024
Trump’s landmark Tax Cuts and Jobs Act of 2017 slashed the top corporate tax rate from 35% to 21%. Campaigning for 2024, he has pledged to reduce it even further to 15%.
The Financial Times, rated “centre,” anticipates Trump to “spend and cut taxes without limits,” assuming a Republican-controlled Congress. “That will push inflation expectations up and bond prices down. The only question is whether the bond market begins to factor this in next year or waits until Trump is elected,” the publication wrote in November 2023.
Earn money gpt rated “centre,” forecasted on Jan. 23 that “a second Donald Trump presidency… could spark a ‘tantrum’ in long-duration bond markets.”
Bond Market: A Potential Source of Uncertainty Under a Trump Victory in 2024
If the economy is robust and the Fed lowers interest rates after achieving a “soft landing” — reducing inflation without causing a recession — yields will likely increase. If the economy falters and Trump cuts taxes, boosts spending or both in the face of a 6% to 8% deficit, the bond market will likely remain stable under a Trump Victory in 2024.