What Could Change for Retirees Living Abroad Under Trump?
3 min read
Anytime a new U.S. president is elected, people naturally start wondering how they’ll be impacted in the short term and long term. And it’s not just Americans living domestically who have their concerns. Changes that impact the country as a whole will also inevitably affect expats. And with a record number of people choosing to retire abroad, as reported by Fortune, many retirees living abroad may be wondering how they’ll be impacted.
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It’s not always clear exactly what will happen going forward, but here are some possible changes for retirees living abroad under President-elect Donald Trump.
Also see three changes Trump could make to retirement regulations.
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Trump has spoken about the possibility of exempting Social Security from income taxes. For retirees living abroad, this could mean more money in their pockets and less for Uncle Sam. This could make it easier to afford the cost of living in another country.
Notably, around 700,000 Social Security recipients live in other countries, according to the Social Security Administration. Dropping the Social Security tax could have a wide-reaching positive effect on current retirees.
But as with anything, there’s bound to be some drawbacks. In particular, there’d be fewer tax dollars coming in, which could exacerbate the nation’s already existing financial troubles. This could have a ripple effect on working Americans as well.
Check Out: Trump Wants To Eliminate Social Security Taxes: 3 Moves Retirees Should Make This Winter
It’s entirely possible that Trump would make changes to existing healthcare policies. Vice President-elect JD Vance has mentioned the possibility of allowing insurance companies to categorize their customers based on their potential health risks. As a result, they could possibly adjust the cost of coverage accordingly.
This could lead to much higher healthcare costs for those with preexisting conditions. In some cases, it could even lead to more denials for coverage.
If this were to occur, it could make living abroad much more appealing to even those who are currently on the fence about making the move. As for retirees already living overseas, it might encourage them to purchase private healthcare policies in their host country.
Trump has gone on record to say he plans to end double taxation for Americans living abroad.
While this does sound like a great benefit, it might not be as impactful for retirees. That’s because expats typically have a $126,500 personal tax exemption under the Foreign Earned Income Exclusion. However, this exemption applies only to those working and earning income while abroad. It doesn’t apply to other types of income, like Social Security benefits.
For retirees, an end to the Social Security tax would likely be more beneficial.
For now, any changes for retirees living abroad under Trump are purely speculative or based on statements made in years past. If you are either already living abroad or planning a retirement lifestyle overseas, the smartest option is to be prepared.
This means staying informed about current and upcoming policies to healthcare, taxation and travel. It also means getting your finances in order so you can weather any potentially higher costs that might come with some of these changes. Even if you’re never directly impacted by any new policy, it doesn’t hurt to know what’s going on and have a plan in place.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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