5 Ways Elon Musk’s Plans for Government Efficiency Could Affect Your Retirement

President-elect Donald Trump has big ideas for government reform, including a new advisory body overseen by billionaire Tesla owner Elon Musk and former Republican presidential candidate Vivek Ramaswamy called the Department of Agriculture. government effectiveness (DOGE).

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DOGE would tackle the reduction of “unauthorized funds” to streamline government efficiency, and would also encourage Trump to rely on a process known as foreclosure, in which the president can refuse to spend the money allocated by Congress, according to AP News. There are concerns that this will include funding for essential services that many retirees rely on, such as Social Security and Medicare.

Experts discussed how such cuts could affect retirees.

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Possible reductions in Social Security and Medicare

During his campaign for Trump, Musk promised to cut $2 trillion from the US federal budget in the first year. According to Chris Orestis, president of Retirement Genius, “He was honest with people when he said it would require short-term pain until we could get long-term benefits.” »

Musk and Ramaswamy have since lowered that amount to $500 billion, but the question remains: where will it come from?

The 2024 budget for Medicare, Medicaid, Affordable Care Act (ACA) subsidies and Social Security represents about 50% of the federal budget, Orestis said, so for these cuts to become a reality, “there is only a few places you can go, and despite any promises to the contrary, that would mean putting all social programs on the chopping block.”

Retirees should pay close attention to the promises that were made during the election campaign and try to plan for the real possibility of cuts and/or disruptions in everything from health benefits to housing and transportation subsidies to security social security and health insurance, Orestis said. “For people living on fixed incomes and relying on these programs, there is little that can be done to compensate if cuts of this magnitude are implemented. »

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Changes to benefits and calculations

Alan Andrews, business consultant at KIS Finance, understands retirees are nervous about potential changes to these essential programs. He suggests that while it is likely that Social Security and Medicare “will be scrutinized” under a DOGE advisory body, direct cuts may not be the first step, but rather changes such as “raising the retirement age or tweaking the calculation of benefits”.

“Medicare could also reduce administrative costs, but this could mean that some of these will be passed on to those who use the services. The challenge here is obvious: reduce waste without harming what people depend on,” Andrews said.

Possible delays in services

One possible outcome instead of a complete removal of Social Security is the possibility of Social Security payment delays, which could extend to weeks or even months under DOGE’s planned workforce reductions , leaving many retirees in a precarious financial situation while they wait for benefits to be processed, Yehuda said. Tropper, CEO of Beca Life.

“For seniors receiving health care from the Department of Veterans Affairs (VA), a reduction in medical and administrative staffing would mean longer wait times for processing disability claims and getting appointments medical and prescriptions,” he added.

Be prepared but don’t panic

Andrews said it’s right to be cautious, but believes there’s “no need to hit the panic button” because, he said, “the Musk story, like cutting Twitter (now If he can bring the same type of attention to government, we could see systems streamlined while remaining efficient.

That said, Social Security and Medicare are not technology companies. “It’s a lot more complicated, so retirees need to be prepared.” Diversifying your income, considering additional insurance or even simply staying informed will make a big difference.

Prepare for fewer resources

If DOGE is able to take off and push Trump to meet his waste reduction goals and the government can reinvest those savings into programs that support retirees, it could strengthen those programs in the future, Andrews said. “But it only works if those savings are reinvested where they are needed. Otherwise, the risk is that retirees will find themselves overall with fewer resources.

“At the end of the day, there’s no crystal ball on how this plays out. Musk’s efficiency mentality offers some hope, but it’s always smart to prepare for any eventuality. Retirees don’t need to panic, but they definitely need to pay attention,” Andrews said.

Orestis said that while their intentions to eliminate waste may be right, “the means by which to achieve this might be too draconian in such a short period of time.”

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