The 2024 elections are right around the corner, and it’s been one of the most contentious campaign seasons in recent memory. For retirees, the outcome of the election has some ramifications, especially with a looming Social Security shortfall, which could lead to drastic cuts in benefits. Whoever is elected this year could help shape how the program is funded and whether benefits are cut and by how much. But Social Security is only one of several issues impacting retirement planning.

“The 2024 election is going to be a big one for retirees,” says Brandon Ashton, director of retirement security at Cornerstone Financial Services in Southfield, Michigan. “Tax legislation, pension reforms, raising the retirement age, raising the required minimum distribution age, healthcare costs and many more issues are at stake in 2024.”

That’s why experts say that those planning for retirement must stay up to date on any changes and how those changes could affect their plans. 1. Prepare for changes to Social Security

Social Security provides a substantial portion of income for America’s retirees, but with the program’s trust fund running low, analysts expect that benefits could be cut as soon as 2033 if the funding situation isn’t solved. The average check would be automatically cut by some 21%, according to NPR, leaving strapped retirees with even less to get by on.

“Whoever wins the presidency will set the tone for the future of Social Security,” says Ashton. Former President Donald Trump and Vice President Kamala Harris “have made contrasting statements about the program, but neither offers a clear long-term solution,” he says.

But regardless of what a new president wants, it is Congress that would ultimately make any funding changes. Some senators have discussed raising the full retirement age, cutting benefits or eliminating the annual cost of living increase, which helps Social Security’s payments keep up with inflation.

2. Adjust for potential changes to income tax rates

Some advisers think the expiration of the 2017 Tax Cuts and Jobs Act — informally known as the “Trump tax cuts” — will be one of the most contentious issues. The law is set to expire at the end of 2025. Congress must act to renew it or the tax regime will revert to where it was in 2017 and earlier. Both candidates have made a variety of proposals to adjust the tax system.

What you can do: Take tax planning seriously. If tax rates move higher, planning your taxes becomes more important. Smart planning can minimize the taxes you have to pay. “Remember, the big variable in retirement income is the amount you take from your qualified accounts (IRA, 401(k), etc.) and the required minimum distribution (RMD) that comes with it at age 73,” says Primavera.

3. Consider a Roth IRA conversion

A potential rise in tax rates in 2026 may mean that this year and next remain opportune times to take advantage of a Roth IRA conversion. With this strategy, you convert a traditional retirement plan such as an IRA or 401(k) into a Roth IRA, which offers a range of benefits.

“If you believe the Trump tax cuts are going to expire, why not take advantage of them while you still can? A Roth conversion is a great strategy in retirement planning,” says Primavera. “If you have a large IRA balance and have room in your current tax bracket for additional income, pay the taxes on the income now and reinvest into your Roth IRA, which can now grow and will not be taxed again.”

What you can do: Consider a Roth IRA conversion. Of course, it’s no guarantee what happens to the current tax rates, but retirement advisers have long advised clients to consider a Roth IRA conversion. The conversion can be especially beneficial if you have many years left in retirement, but advisers such as Primavera suggest that clients avoid bumping themselves into the next tax bracket when they convert. Even if tax rates don’t rise, this move could still make sense, but plan carefully.

4. Watch out for changes to estate taxes

“Regarding the Trump tax cuts that are expected to expire at the end of 2025, the biggest change would be the estate tax reduction,” says Steve Azoury, ChFC, owner of Azoury Financial in Troy, Michigan.

The current estate tax laws in 2024 allow Americans to give away $13.61 million without paying any estate taxes. Each individual gets the exemption, for a total of $27.22 million per couple gifting together. If the estate tax reverts to the prior system, this amount will drop to about $7 million per person, according to tax experts. Any money given above that threshold will be taxed at rates as high as 40%, and that’s not including other levies at the state level, such as inheritance taxes.

What you can do: Keep an eye out. You’ll have some time to see which way the wind is blowing on this issue, so it’s not a move that you need to make immediately. However, given the huge tax savings that come with gifting a large estate under the current system, it could make sense to speak with your financial adviser about your personal situation. “You may want to do your gifting now in order to preserve these deductions,” says Azoury.

5. Don’t abandon your long-term game plan

You might be tempted to abandon your investment and retirement plan if your preferred candidate doesn’t win. Don’t do it, experts say.

“Elections are always fun. Everyone has an opinion, but this should not change your retirement goals,” says Azoury. “These goals should be set based on your lifestyle, assets, income and what activities you plan to do in retirement.”

“The one thing I would refrain from doing with your nest egg is selling it all and going straight to cash,” says Primavera. If you need to reduce risk, do so methodically. “Instead of a knee-jerk reaction and pulling everything out of the market, reduce your market exposure with a periodic rebalancing of your portfolio to a more risk-averse strategy,” he says.

What you can do: Stick to the investment plan that meets your long-term needs, don’t sweat the short-term noise, and, above all, avoid costly, emotional reactions when investing. The economy and stock market have performed well under Republican and Democratic administrations, and in particular under both Trump and President Joe Biden, as shown in this Bankrate comparison.

Bottom line

It is vital for retirees to stay up to date on changes that affect them, particularly on the key areas that affect their income the most. It’s also key to make sensible, well-considered decisions that work in your long-term financial interest rather than making ill-advised and emotional decisions based on half-truths. Work with an experienced financial adviser to help you stick to a game plan that works for you and your family.

(Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.)