President-elect Donald Trump’s inauguration is just weeks away, signaling a change to economic policies that could affect your wallet and savings.
Financial experts are urging the middle class to take proactive steps to brace for anticipated economic shifts, potential tax cuts, trade policy changes, and market volatility.
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The middle class should review their retirement strategies before Inauguration Day, said Christopher Stroup, founder and president of Silicon Beach Financial.
“Increasing 401(k) contributions, maxing out IRAs or considering Roth options can help hedge against tax law changes,” Stroup said. “Rebalancing portfolios toward more resilient, long-term investments like index funds or dividend stocks can mitigate your risks from market volatility and tax policy changes.”
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President-elect Trump promised to extend or make permanent individual and corporate tax breaks, which he enacted during his first term and are expected to expire a year from now.
Trump needs congressional approval by the end of the year to make good on his promise. Republicans typically favor lowering individual tax rates and increasing standard deductions. However, Congressional Republicans hold a slim majority and need to vote in lockstep to continue the middle-class tax breaks.
Financial experts advised clients to prepare as if the tax breaks would end in December 2025.
“With potential tax law changes, middle-class families can take advantage of tax-deferred accounts like 401(k)s or IRAs,” Stroup said. “Tax-efficient investments such as municipal bonds, charitable giving and managing capital gains, can also reduce taxable income. Consulting a tax profession for personalized strategies is highly recommended.”
While Trump campaigned on lowering interest rates by implementing policies to reduce inflation, his pledge to impose tariffs, decrease tax rates and reduce business regulations could boost inflation and increase the nation’s debt.
“Trump’s fiscal policies can be expected to lead to rising and more unpredictable mortgage rates through the end of this year and into 2025,” Lisa Sturtevant, chief economist with Bright MLS, said in an interview with the Associated Press.
