What Trump may mean for re­tirees

Financial Mirror (Cyprus) - - FRONT PAGE -

ev­ery­thing within my power not to touch So­cial Se­cu­rity, to leave it the way it is’.”

But will Con­gres­sional Repub­li­cans let Trump keep that prom­ise? After all, the Repub­li­can Party has been try­ing to elim­i­nate So­cial Se­cu­rity since it was first in­tro­duced in 1935. Pres­i­dent Ge­orge W. Bush made So­cial Se­cu­rity re­form/pri­vati­sa­tion his main do­mes­tic pol­icy is­sue at the be­gin­ning of his sec­ond term and failed to make any head­way. How­ever, he did not have a com­pli­ant Se­nate as does Trump.

What could hap­pen? One as­pect of the Bush plan was to grad­u­ally elim­i­nate So­cial Se­cu­rity by al­low­ing younger work­ers to choose to con­trib­ute to So­cial Se­cu­rity or to a pri­vate re­tire­ment ac­count. House Speaker Paul Ryan sup­ported that pro­posal and an even more rad­i­cal ap­proach to pri­vatis­ing So­cial Se­cu­rity. Bush is no longer in of­fice, but Ryan is and pres­sure on Trump to make big changes to So­cial Se­cu­rity will be strong.

Can­di­date Trump also promised to pro­tect Medi­care ben­e­fits but his sin­gle spe­cific state­ment was lim­ited to al­low­ing Medi­care to ne­go­ti­ate with phar­ma­ceu­ti­cal com­pa­nies over drug prices, a po­si­tion Repub­li­cans have al­ways op­posed.

In fact, Paul Ryan last week also said a move to pri­va­tise Medi­care is once again on the Con­gres­sional agenda. In an in­ter­view Ryan said, “Medi­care has some se­ri­ous is­sues be­cause of Oba­macare. So those things are part of our plan to re­place Oba­macare.”

Th­ese may be the two big is­sues for re­tirees, but there are oth­ers.

The U.S. Depart­ment of La­bor has be­gun im­ple­ment­ing a rule re­quir­ing any fi­nan­cial advisor who han­dles re­tire­ment ac­counts to put their client’s in­ter­ests ahead of the advisor’s own. This is usu­ally called the “fidu­ciary rule” and Repub­li­cans have op­posed it. Trump has promised less reg­u­la­tion and it is hard to see how this rule will sur­vive un­til its full im­ple­men­ta­tion is due in 2018.

Five states have re­cently en­acted leg­is­la­tion to force ev­ery worker into a re­tire­ment plan. Usu­ally called “au­to­matic IRAs” the laws re­quire em­ploy­ers ei­ther to en­rol their em­ploy­ees in a 401(k) plan or a pen­sion plan or to di­rect em­ploy­ees to a por­ta­ble IRA ad­min­is­tered by the state. This had some bi­par­ti­san sup­port, but there are parts of the fi­nan­cial in­dus­try that are strongly op­posed to au­to­matic IRAs. Chances of get­ting a fed­er­ally backed au­to­matic IRA ap­pear to be slim and none.

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