What does the Fiscal Cliff mean for retirees?

The Fiscal Cliff is a hot topic in American politics right now, with the White House and congressional republicans negotiating a resolution that will prevent scheduled tax increases and spending cuts scheduled to take effect on January 1, 2013, which experts say could push the United States back into a recession.

While the political power brokers attempt to negotiate a settlement, retirees are one group that will be affected significantly by any changes that will take place.

As reported recently by Reuters, one of the most important potential consequences of the fiscal cliff for seniors is the expiration on December 31 of tax cuts for investments such as capital gains, dividends and income. President Barack Obama is a proponent of increasing tax rates, while congressional republicans have been cool to that idea.

Regardless of whether new tax increases are implemented in the new year, financial advisors recommend seniors and retirees do not make radical changes in their retirement savings plans.

“Don't let the tax tail wag the investment dog, and keep your long-term goals in perspective,” John Sweeney, the executive vice president of portfolio and advisory services of Fidelity investments, told the news wire service.

Do you plan on changing or re-evaluating your investments and retirement savings with the fiscal cliff looming? Tell us about it in the comment section below.