The full impact of tariffs on consumer prices and the cost of living remains to be seen, especially since President Donald Trump’s high tariffs were recently declared unlawful by the Court of International Trade, then quickly temporarily reinstated. It remains to be seen whether the Trump administration’s attempts to push back and implement the tariffs long-term will be successful.
Read More: Mark Cuban: Trump’s Tariffs Will Affect This Class of People the Most
Try This: How Middle-Class Earners Are Quietly Becoming Millionaires — and How You Can, Too
Additionally, many businesses are still running through pre-tariff inventory, not to mention the frequent proposed or real changes to tariff rates on different countries or product categories. That said, there will likely be higher prices later this year in areas ranging from cars to toys to certain grocery items.
These higher prices might take a bigger chunk out of lower-income household budgets, but that doesn’t mean others are fully insulated. Here are some of the top ways even wealthy retirees could be affected by tariffs.
Trending Now: Suze Orman’s Secret to a Wealthy Retirement–Have You Made This Money Move?
Pushing Big Spenders to the Brink
Just because you’re wealthy in terms of having a large retirement portfolio to draw from doesn’t necessarily mean that you’re in a great cash flow situation.
“In many cases, wealthy retirees have more purchasing power than non-wealthy retirees. If this is the case, they would be better able to absorb price increases. This is not always true. Some spend at maximum capacity and as a result, the price impact could affect their consumption,” said Jeffrey Christakos, CPA, CFP, Christakos Financial.
For example, if a wealthy retiree withdraws $20,000 per month from their retirement savings but spends the full $20,000 on travel, eating out and possibly some large expenses like a mortgage on a vacation home, then they might not have the wiggle room to easily afford things like a new car or gifts for family members.
If they have to dip further into their retirement savings to spend more, that can limit the number of years their nest egg is projected to last.
Check Out: I Asked ChatGPT What Will Get More Expensive When Trump’s Tariffs Go Into Effect, Here’s What It Said
Triggering Money Scripts
Even if a wealthy retiree has more than enough savings to draw from, higher prices could cause them to pull back on spending due to the psychological effects.
“People also have money scripts, which are unconscious beliefs regarding money. If they are money vigilant, they may not be interested in spending the extra funds, regardless of their level of wealth,” said Christakos.
For example, if someone grew up working class, they might scoff at high prices on non-essentials like clothing or electronics. As such, they might keep the items they have longer, which can be good for their own finances but affect the broader economy.
Delaying Financial Gifts
Lastly, tariffs could put a pause on wealthy retirees gifting money or other things of monetary value to family members.
Rather than selling assets in their retirement accounts to give cash to family, for example, they might decide to wait to see if volatility subsides. Or, they might not be sure how much they can comfortably give if their own costs are likely to go up, so they might wait for more clarity.
“The current environment has been turbulent with the open negotiation of tariff rates on various countries and products. Redistribution of wealth among family members may have to be delayed until there is more certainty,” said Christakos.
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.
More From GOBankingRates
7 McDonald’s Toys Worth Way More Today
4 Companies as Much as Tripling Prices Due To Tariffs
Use This Checklist to See if Your Family is Financially Secure
7 Wealth-Building Shortcuts Proven To Add $1K to Your Wallet This Month
This article originally appeared on GOBankingRates.com: 3 Ways Tariffs Could Affect Wealthy Retirees
