Eight Ways Trump Could Impact Your 401(k), Nest Egg and Retirement Readiness

Worried mature couple feeling frustrated while trying to get their finances in order, looking at a tablet.

(Image credit: Getty Images)

We're one year into President Donald Trump's second term, and, as expected, his economic policies are affecting Americans' retirement planning and nest eggs.

The big moves during Trump's second term that impact 401(k) savers and retirees include the passage of the president's tax-friendly "One Big Beautiful Bill," an executive order that opens the door for 401(k) plans to include private investments and cryptocurrencies, and more recent proposals to address the "affordability" challenge that Americans are facing.

Trump's policies can move the retirement needle in direct and indirect ways. Whether it's tax savings that free up more money to invest, or giving retail investors access to private investments once reserved for the wealthy, or potential moves like capping credit card interest rates or allowing 401(k) savers to withdraw $10,000 penalty-free for a down payment on a house, Trump-onomics can have big dollars-and-cents implications for retirement account balances.

From just $107.88 $24.99 for Kiplinger Personal Finance

Become a smarter, better informed investor. Subscribe from just ~~$107.88~~ $24.99, plus get up to 4 Special Issues

CLICK FOR FREE ISSUE

https://cdn.mos.cms.futurecdn.net/flexiimages/y99mlvgqmn1763972420.png

Sign up for Kiplinger’s Free Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

There are also other ways Trump could impact your nest egg. The president's continued use of tariffs to gain political leverage can also move markets. So can his unpredictable geopolitical strategy, such as his intention to acquire Greenland and the capture of the president of Venezuela. Trump's public pressure on the Federal Reserve to lower interest rates could also undermine central bank independence, leading to heightened market volatility and continued downward pressure on the dollar, which in late January fell to a four-month low, hurting Americans' purchasing power.

If you're a retiree or have a 401(k) or IRA account, and you're wondering what it all means for your bottom line and whether you may need to tweak your retirement plan, you're not alone.

Trump-onomics can have big dollars-and-cents implications for retirement account balances.

Trump's growth-friendly policies, which include tax cuts for Americans and tax breaks for corporations, are already being felt on Wall Street. In 2025, Trump's first year, investors pushed the benchmark S&P 500 stock index up 16.4% with 39 record closing highs along the way. Large-cap stocks are up nearly 2% in January. The market has been in rebound mode since the 10%-plus drop in March 2025, which was sparked by confusion over the implementation of Trump's tariff plans. Still, threats of new tariffs on trading partners continue to result in periodic risk-off days for U.S. stocks.

The Trump administration, though, hasn't taken steps to shore up Social Security, which means American workers could see a cut in benefits starting in 2033.

While tariffs haven't caused a massive spike in inflation as feared, they remain a sticking point for the market amid an affordability crisis for many Americans. Inflation was down to 2.7% in December 2025, down from 3% in January 2025 and still above the Fed's 2% target. But it's still hard to know how Trump's tariffs will impact future inflation, which erodes Americans' purchasing power and crimps cash flow. Economists say tariffs will force companies to pass on higher costs to consumers.

It's important to note that while presidential policies can move the economic needle, the president can't exert control over all the levers that drive the economy and markets.

"The economic trends and forces that are in place are far more powerful than presidential policies," says Ross Mayfield, investment strategist at Baird Private Wealth Management.

How Trump could change your retirement

Still, there's no doubt, Trump's policies can have an impact — both positive and negative — on the nation's retirement readiness.

Here are eight ways Trump could change your retirement.

1. Lower taxes means more money to spend and save

The One Big Beautiful Bill (OBBB) extension of the Tax Cuts & Jobs Act (TCJA), which was originally set to expire at the end of 2025, means Americans' paychecks didn't shrink as feared.

The extension of TCJA is a tailwind for spending.

"Fewer taxes mean more money in your pocket," says Chris Mediate, president of Mediate Financial Services. "This could enhance retirement savings, as retirement is always about the money you can keep from your income."

More post-tax income is a plus for both retirees on fixed incomes and pre-retirees still in the asset accumulation stage.

Making the 2017 tax law permanent also means that people have a longer runway to take advantage of the lower tax brackets, says Rachelle Tubongbanua, a private wealth adviser at U.S. Bank. One strategy to consider is converting traditional 401(k) or IRA dollars into a Roth IRA, which allows for tax-free withdrawals.

Another option is to convert a traditional 401(k) to a Roth 401(k). The time is right now because with tax rates low, you’ll pay less in taxes on the dollar amount you convert to a Roth account.

"The narrative is to really minimize taxes in the future (when they are likely to be higher),” says Tubongbanua. "You want to take advantage of opportunities that are available to you right now."

Potential benefits cuts: While Trump has vowed to protect Social Security, his administration has not taken any direct measures to shore up the financially troubled program.

Trump has repeatedly said that he "will not cut Social Security" but instead is focused on eliminating "waste and fraud" to help keep it solvent. In the short run, that’s a plus, as those receiving Social Security checks can continue to count on 100% of their benefits.

"I don't think people have to worry about their checks," says Mayfield.

Operational cuts: Still, Trump has taken steps to reduce Social Security costs by trimming the agency's workforce and temporarily closing field offices, which resulted in longer wait times to speak with a Social Security representative last year. Overall, wait times have since come down to 51 minutes in October 2025 for those who choose to wait on hold.

Trump's decision to temporarily transfer control of Social Security's leadership in 2025 to DOGE led to a breach affecting about 300 million accounts, according to a whistleblower. The Trump administration has since admitted that a DOGE employee shared information through an unauthorized server.

Tax cuts and Social Security insolvency: Trump's proposal to end taxes on Social Security benefits did not come to fruition. Depending on a retiree's income, up to 85% of benefits could be subject to taxes under current law.

What the OBBB did offer, however, was a $6,000 tax deduction for those 65 years of age or older in addition to the standard deduction. This extra deduction is designed to lower a retiree's taxable income and, therefore, the amount of tax owed. This temporary tax perk expires after 2028 and is subject to income thresholds.

However, the high cost of tax cuts in the OBBB and the resulting increase in the nation's deficit could put Social Security on even shakier ground, according to the nonpartisan Center for Budget and Policy. There's a risk that it will accelerate the timetable when full benefits won't be paid.

Currently, Social Security recipients can expect to get 100% of their benefits through 2033. However, unless Congress takes steps to shore up Social Security, the trust fund will be depleted, and the government will be able to pay only 77% of earned benefits, based on ongoing Social Security payroll deductions from working Americans.

"In 10 years, checks will be cut by more than 20%, and nobody wants to see that happen," said Lindsay Theodore, thought leadership senior manager at T. Rowe Price. "That’s a big concern that we’re watching closely."

Despite the uncertainty about the solvency of Social Security, "there haven't been any real credible threats, at least as of now, targeting actual benefits," says Matthew Allen, co-founder and CEO of Social Security Advisors, a firm that advises Americans on claiming strategies.

T. Rowe Price's Theodore still advises people to delay Social Security to lock in a larger lifetime benefit, rather than panic and start benefits earlier at a reduced rate. "It’s about a 70% difference between your (benefit) paycheck at 62 vs waiting until age 70," said Theodore.

3. How corporate tax incentives could lift your 401(k)

The OBBB included a host of tax incentives to boost business growth. The tax dollars corporations avoid go directly to their bottom line, boosting their profitability. And corporate earnings are a key driver of stock prices.

Retirement savers who own stocks could see the value of their holdings in their 401(k) plans rise, says Baird's Mayfield. Similarly, Trump's push to reduce regulations on businesses to boost animal spirits, he says, bodes well for stock investors. "They are all tailwinds for corporate profitability," says Mayfield.

Adds Mediate: "When markets perform well, many retirement challenges are mitigated."

Theodore says an active management approach to investing could outperform during Trump’s second term.

Portfolio managers are more nimble and can move more money into stock in sectors of the economy that will benefit from the president’s policies, such as manufacturing companies, and allocate less capital to sectors that will suffer, such as electric car makers and renewable energy, which analysts say will be hurt by cuts to tax credits that offset the cost of buying an EV or solar panels for a home.

4. Trump paves the way for the inclusion of alternative assets in employer-sponsored retirement accounts

In August 2025, Trump signed an executive order that opened the door to adding alternative assets, such as private equity, private credit, and cryptocurrencies such as bitcoin, to 401(k) plans.

These assets, which have traditionally only been available to high-net-worth investors and large institutions such as pension funds, are now accessible to a broader range of investors.

Private-equity investments will be permitted in employer-sponsored retirement accounts through target-date funds and managed accounts administered by investment professionals.

Private-equity investments, which differ from publicly owned companies that trade on the New York Stock Exchange or Nasdaq, tend to be less liquid (code word for not as easy to sell), are more difficult to value, and charge higher fees, says Thomas Racca, manager of the personal finance team at Navy Federal Credit Union.

However, since retirement accounts are long-term investments, proponents of private equity argue that it could add more diversification and upside potential.

Still, given the lack of liquidity and higher fees for private assets, retirement savers "would likely want to limit exposure to a modest portion of their total portfolio," Racca said.

Given that the number of publicly traded stocks has declined from 7,300 in 1996 to roughly 4,300 today, according to EQT, a global investment company, adding privately owned companies to 401(k) plans provides investors with a larger pool of assets to invest in.

"Over 99% of American businesses are private, and these investments allow people to participate in a much broader universe of opportunities," says Michael Weisz, founder and CEO of Yieldstreet, an alternative investments platform.

Moreover, a 2023 study by Georgetown University’s Center for Retirement Initiatives (PDF) found that substituting a 10% private equity stake for publicly traded stocks in a portfolio boosted the median annual return by 0.22% and produced positive outcomes 80% of the time.

Trump's move to clear the way for digital assets to be included in 401(k) plans democratizes investing, says Ben Weiss, CEO of CoinFlip, a digital asset platform. "It represents a significant step toward making digital assets more accessible to everyday Americans," he says.

Cryptocurrencies come with risks and have historically been highly volatile investments, experts note.

In the bigger picture, Trump's executive order gives 401(k) investors a larger menu of investments from which to choose.

"I’m a big advocate for giving people options," said Taylor Davis, a wealth management adviser at Meridian Wealth Management. Having the option to invest in private companies allows investors to diversify beyond the S&P 500, which is currently dominated by a handful of mega-cap companies such as Nvidia and Microsoft.

"You can invest alongside private equity companies who are rolling up (e.g., acquiring multiple companies), HVAC companies, dental practices, or construction companies," said Davis.

Still, the added complexity of private equity and digital currencies means there will be a steep learning curve for investors, Davis says. Investing in these new asset classes might not be for everybody, he adds.

"The way I think about it is, it's kind of like having access to a Corvette or Formula 1 car," said Davis. "It can go fast, but in the wrong hands with the wrong level of skill and experience, it may not turn out so good."

5. Tariffs could still feed inflation, hurting Americans’ purchasing power

The fear that Trump's tariffs would cause inflation to reignite and spike has not materialized. But inflation hasn't come down much, either. That's both good and bad news for savers and retirees, as persistent inflation could erode the purchasing power of working Americans and retirees.

Still, the full impact of tariffs has yet to be felt in consumer prices, says Rob Leiphart, VP of financial planning at RB Capital Management. "There could still be additional inflation," says Leiphart.

A return to inflationary times would be harmful for all Americans, who are still recovering from the post-COVID spike in inflation, which peaked at 9.1% in 2022, its highest level since 1981.

6. Health care costs could rise for many

Trump's OBBB has more than $1 trillion in cuts to health care programs in the next 10 years, according to Chartis, a health care advisory firm. The bill made deep cuts ($900 billion) to Medicaid, the health insurance program for low-income Americans.

The cuts, along with new work requirements to be eligible for benefits, could cause millions to lose coverage. The Congressional Budget Office (CBO) estimates that 16 million people will lose insurance coverage due to the bill's effects.

As of this writing, the Senate has not passed a Jan. 8, 2026, House bill that would extend Obamacare tax credits (subsidies) for three years, designed to lower health care premiums. The subsidies were not extended under the Big Beautiful Bill passed last summer. Nor has the Senate introduced its own bill to lower health care costs. The result has been a doubling and tripling of premiums for Americans who get medical coverage through the Affordable Care Act marketplace.

It's no surprise that health care costs rank as retirees' "top financial worry" for 2026, according to a recent survey from Oath Planning (PDF).

T. Rowe Price's Theodore advises clients to monitor these developments closely, as they could significantly affect the affordability of health care.

"Health care is a big question mark," says Patti Brennan, CEO of Key Financial. "It's probably safe to assume those costs will increase for most people who are retired."

7. Proposals to alleviate "affordability" challenge get mixed reviews

In an effort to make everyday living more affordable and to make it easier for young Americans to buy a home, Trump has proposed capping credit card interest rates at 10% and allowing first-time homebuyers to tap their 401(k) by up to $10,000 to fund a down payment.

While lower borrowing rates will no doubt be welcomed by users of credit, the idea of dipping into retirement accounts to buy a home gets mixed reviews.

"It's like a coin, because it's got two sides to it," says Bruce Maginn, partner at Solomon Financial. "I like the idea overall, but it's not ideal. Any avenue that (helps) our younger generation become homeowners and enjoy the American Dream and not be subject to annual rent increases is a plus. (The downside) is taking a $10,000 withdrawal means missing out on decades of compounding in their 401(k) retirement account."

8. Market volatility could rise

With the endgame of Trump's tariff policies and U.S. expansion into places like Venezuela and Greenland still unclear, investor uncertainty could persist, leading to elevated financial market volatility.

Wall Street research notes indicate that the so-called "Sell America" trade is whipsawing U.S. assets, especially the dollar, which has long been viewed as the world's reserve currency and haven.

While the S&P 500 has rebounded and is hovering near record highs, there's no saying foreign investors won't accelerate their sales of U.S. assets, such as the dollar, U.S. Treasury bonds, and domestic stocks, experts warn.

"I'd be more worried about countries selling Treasuries," said Maginn. Large-scale foreign selling of U.S. government bonds could raise borrowing costs for U.S. consumers and increase the cost of servicing the U.S. federal government's massive debt.

How significant a risk is a "Sell America" outcome? It's too early to tell, says Leiphart. "There's not enough data yet to sort of posit what that might mean," says Leiphart.

If stock and bond prices suffer steep, lasting price corrections, retirement savers and retirees must ensure they have solid financial plans that allow them to ride out the storm. Getting spooked and making poor financial decisions due to fear will only make matters worse.

"The market prefers stability, right?" says Tim Steffen, director of advanced planning at Baird. "It likes certainty." Investors and retirees must not get caught up in the noise, says Steffen. "Don’t make long-term bets based on the latest proposal or talking point or tweet," he says.

Keep calm and carry on

Despite the many ways Trump 2.0 could affect your money and retirement, the best advice is to stay the course and keep executing your financial plan, says Tubongbanua.

"Focus on your long-term plan and goals and objectives," says Tubongbanua. "Tweak it (your plan) here and there if needed once policies do come into play and impact your finances."

Adam Shell is a veteran financial journalist who covers retirement, personal finance, financial markets, and Wall Street. He has written for USA Today, Investor's Business Daily and other publications.