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Presidential election years typically bring stock market volatility and economic uncertainty. Retirees in particular worry about everything from inflation to Social Security to the value of their investments. In general, 80% of Americans are worried about how the election will affect their retirement, and 73% of retirees say they are concerned, according to a Think Advisor survey published by Wealth Enhancement.
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Americans generally believe that the economy will improve if their favorite candidate wins, and that the economy will worsen if their opponent wins. This kind of thinking is not necessarily based in fact. Nevertheless, corporate taxes, capital gains taxes and inflation could increase if some of the policies proposed by Vice President Kamala Harris pass, according to retirees and financial experts GOBankingRates spoke to. It is said that there is a sex.
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Corporate taxes may reduce the value of your investment
The 2017 Tax Cuts and Jobs Act is scheduled to repeal at the end of 2025 and is unlikely to be extended or renewed unless Trump wins the election. “If it expires, you’re likely to pay more in income taxes, and so are businesses,” said Mark Marek, chief information officer at financial advisory firm Sievert.
Additionally, according to NBC News, Harris has proposed raising the corporate tax rate to 28%. “That means corporate profits will be squeezed,” Marek explained. “That’s not good for your stock portfolio no matter how you look at it.”
According to an article published by the Tax Foundation, a non-partisan nonprofit organization specializing in tax policy, a Harris victory could result in a 2% decline in gross domestic product (GDP) and a 3% decline in capital stock in the long term. I predicted that there would be sex.
Vince Speights, a former small business owner in Pennsylvania’s Lehigh Valley, said he wasn’t impressed with his portfolio during the Biden administration and is worried there will be more of the same.
“The last three and a half years have been tough financially,” he said. “There’s nothing like watching all your retirement accounts plummet. Especially when you retired before this administration, all your retirement accounts were growing steadily. Now it’s not good at all. .”
Read more: 9 strategies Americans are using to minimize taxes on their retirement savings
Increase in capital gains tax
“The tax implications for capital gains and unrealized capital gains are equally dire,” Speights continued.
the story continues
Harris is proposing a long-term capital gains tax of 28% for people earning more than $1 million a year, up from the current top rate of 20%. According to experts, the vice president also mentioned taxing unrealized capital gains.
“Mr. Harris proposed a 25% tax on unrealized capital gains,” said Adam Ferrari of Phoenix Capital Group. “For retirees, this could mean an increased tax burden on investments, which reduces the amount of capital retirees can withdraw, especially if they rely on their savings for income, over the long term. This will have an impact on savings.”
According to Reuters, Harris’ plan would only tax unrealized capital gains over $100 billion. However, this could force high-income earners and large companies to sell their stocks, which could have a negative impact on the stock market and other investments.
Inflation may continue
A recent Coupon Cabin poll reported by Newsweek found that 38% of Americans said they would significantly cut spending if Harris won the election. Only 24% of Americans said they would do the same if Trump won. Concerns about rising and sustaining inflation may cause people to tighten spending.
Harris has promised to further reduce prescription drug costs for Medicare recipients by negotiating drug prices with drug companies, but many retirees won’t see their investment funds eroded by inflation that much. I am concerned that this may be the case. Rising interest rates have slowed inflation, but prices continue to rise. “Everything is still more expensive than last year, much more expensive than it was four years ago,” Spatz said.
But some economists debunk this concern. “Voters’ concerns about Harris’ policies may not be in line with what actually happens, because these expectations are shaped by recent inflation experience rather than a deep understanding of future economic trends. ,” said Kevin Thompson. CEO of 9i Capital Group told Barron’s.
Social Security may go bankrupt
Mr. Spatz relies on his own investments, passive income from his business and his wife’s health insurance as an employee, delaying his collection of Social Security and Medicare. “They’re waiting until next year’s full retirement age to receive their benefits. But will they be there?” he speculated.
Both Harris and Donald Trump have said they will protect Social Security benefits. If President Trump wins and chooses to eliminate taxes on Social Security benefits, there could be even less money left in the Social Security and Medicare Trust Fund, reducing tax revenue by $1.6 trillion, according to Forbes magazine. . The fund is already expected to run out of money by 2034, meaning only 80% of benefits will be paid out. Harris has not yet proposed a plan to protect the fund.
“The Seniors Coalition wants to know what actions the presidential candidate will take to address the looming bankruptcy issue if elected,” said Shannon Benton, executive director of the advocacy group Seniors Coalition. told CBS MoneyWatch.
“Social Security is facing bankruptcy, but many presidential terms have not changed anything. I don’t think this will change no matter who is elected,” said Jamie Brise, a business owner in St. Louis, Missouri. Meister said.
Editor’s Note on Election Coverage: GOBankingRates is nonpartisan and strives to objectively cover all aspects of the economy and provide balanced reporting on politically focused financial stories. More information on this topic can be found at GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: I’m a retired boomer: 4 financial concerns if Harris wins election
