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

We're one year into President Donald Trump’s second term, and, as expected, his economic policies are having an impact on Americans’ retirement nest eggs.

The big moves during Trump 2.0 that impact 401(k) savers of all ages 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 its tax savings that free up more money to invest, or giving retail investors a chance to gain 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 dollars-and-cents implications for retirement account balances.

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There are other ways Trump could impact your nest egg. The president's continued use of tariffs to gain political leverage can move markets, too. So can his unpredictable geopolitical moves, such as his intention to acquire Greenland and the capture of the president of Venezuela. Trump's pressuring of the Federal Reserve to lower interest rates could also undermine central bank independence, resulting in heightened market volatility and continued 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 retirement account, and you’re wondering what it all means for your bottom line and if you may need to tweak your retirement plan, you’re not alone.

Trump’s impact and growth-friendly policies, which include tax cuts for Americans and tax breaks corporations, is already being felt on Wall Street. In Trump's first year, investors pushed the benchmark S&P 500 stock index up 16.4% in 2025 with 39 record closing highs along the way. Large-cap stocks are up nearly 2% in 2026. The market has been in rebound mode since the 10%-plus drop in March 2025, which was sparked by confusion surrounding 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.

And, while tariffs haven't caused a massive spike in inflation as feared, tariffs continue to remain a sticking point for the market amid an affordability crisis for many Americans. Inflation was down to 2.7% in December 2025, still above the Fed's 2% target. But it's still hard to know how Trump's tariffsf will impact inflation, which eats into Americans’ purchasing power and crimps cash flow. Economists say tariffs will likely 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 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 Rachele Tubonganua, 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.

A similar option is to convert a traditional 401(k) into a Roth 401(k). The time is right now because with tax rates low, you’ll pay less 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 Tubonganua. “You want to take advantage of opportunities that are available to you right now.”

2. Social Security: Angst about customer service now and potential cuts in the future

While Trump vows to fight to protect Social Security, his administration has not taken any direct measures to shore up the financially troubled benefit 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.

Still, Trump has taken steps to lower Social Security costs by trimming its employee count and temporarily closing field offices, which has resulted in longer wait times to speak with a Social Security representative.

Former Social Security Administration commissioner Martin O’Malley has publicly wared of an “interruption in benefits” due to system outages caused by the firing of experienced employees who know the system well.

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 on top of 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, after that, unless Congress takes steps to shore up Social Security, the trust fund will be depleted, and the government will only be able to pay 77% of earned benefits thanks to ongoing Social Security payroll deductions from working Americans.

“In 10 years, checks will be cut by 21%, 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 take Social Security later to lock in a larger lifetime benefit rather than panicking and taking 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)

Trump's push to lower the corporate tax rate from 21% to 15% didn't happen. But the OBBB did include a host of tax incentives for businesses to boost growth. The dollars that corporations avoid in taxes go right to their bottom line, which boosts 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 way for inclusion of alternative assets in employer-sponsored retirement accounts

In August 2025, Trump signed an executive order that opens 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 allowed in employer-sponsored retirement accounts via target-date funds and other types of so-called managed accounts administered by investment pros.

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 say it could add more diversification and upside potential to retirement accounts.

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 netted a better median return of 0.22% per year 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.”

Cryptocurrencies come with risks, of course, and have historically been very 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 means investors can diversify away from the S&P 500, which is currently driven 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 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 feed inflation, hurting Americans’ purchasing power

The fear that Trump's tariffs would cause inflation to reignite and shoot up sharply have not come to fruition. But it hasn't come down much, either. That's good and bad news for savers and retirees as persistent inflation could put a dent in retirees' and working Americans' purchasing power.

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 a negative for all Americans, who are still hurting from the post-Covid spike in inflation that 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 impacts from the bill.

And, as of this writing, the Senate has not passed a Jan. 8, 2026, House bill that called for a three-year extension of Obamacare tax credits, or subsidies, designed to lower health care premiums. The subsidies were not extended as part of 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 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.

T. Rowe Price's Theodore advises clients to watch these developments closely, as they can have a huge impact on 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. Deportation of immigrants could have negative effects

Many of the undocumented immigrants that Trump is deporting earn and spend money in the economy and are key sources of labor in agriculture, housing and other service industries, Theodore notes.

One potential downside is higher prices for fruits and vegetables, pinching the budgets of retirees and other Americans.

What’s more, higher prices for building materials are resulting in higher costs for new home construction and home renovations. In addition, increased deportations could lead to higher construction labor costs if the supply of workers shrinks.

For retirees needing hired caregivers, Trump's policies to end some programs for legal immigration could reduce the number of home health care workers.

8. Market volatility could rise

With the endgame to Trump’s tariff policies still unclear, investor uncertainty could persist, leading to elevated financial market volatility, witnessed by the stock market’s first correction since 2023 earlier this spring.

While the S&P 500 has rebounded and gone on to new highs, there’s no saying investors won’t retreat if economic data starts to weaken in the face of tariff headwinds.

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 all the different ways that Trump 2.0 could impact your money and retirement, the best advice is to stay the course and keep executing your financial plan, says Tubonganua.

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

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