"3 Major Financial Concerns for Americans Ahead of the Presidential Election"
Key Takeaways
- Election Impact on Finances: A significant majority of American investors are anxious about how the presidential election might affect their finances.
- Retirement Plans at Risk: 80% of respondents anticipate the election will influence their retirement plans, with concerns over Social Security and inflation.
- Market Volatility Concerns: Nearly 25% are worried about stock market performance post-election, though historically, markets have generally fared well during election years.
- Tax Policy Uncertainty: The potential expiration of the Tax Cuts and Jobs Act in 2025 raises questions about future tax implications for individuals and families.
As the U.S. presidential election draws near, many American investors are expressing significant concerns about its potential impact on their finances. Recent surveys reveal that a majority of respondents are worried about how the election could affect their retirement plans, stock market performance, and tax policies.
According to the MassMutual Consumer Spending & Saving Index, 86% of those surveyed are anxious about how the election might influence their daily finances. Notably, around 25% indicated that personal financial considerations will play a crucial role in their voting decisions.
Impact on Retirement Plans
A survey conducted by Wealth Enhancement found that 80% of participants believe the election will have some effect on their retirement plans. Many investors are concerned about the future of programs like Social Security and Medicare, especially in light of ongoing inflation, which continues to impact prices. Half of the respondents reported that inflation has delayed their retirement plans by an average of 8.5 years.
Financial advisors suggest that those feeling anxious about the election should consult with their advisors to ensure their financial strategies are resilient regardless of the election outcome.
Potential Stock Market Volatility
Another area of concern for investors is stock market performance following the election. Nearly 25% of respondents from the Wealth Enhancement survey are worried about potential volatility. However, financial experts remind investors that, historically, election years have yielded mostly positive market returns. Out of the 24 election years since 1927, only four have seen negative annual returns.
Experts recommend focusing on long-term investment fundamentals rather than short-term political dynamics, emphasizing that market timing based on political events is challenging.
Uncertainty Around Tax Policy
Tax policy remains a significant worry for many investors. The Tax Cuts and Jobs Act (TCJA), which lowered income tax brackets and increased the estate tax exemption, is set to expire on December 31, 2025. If Congress does not act, this could complicate tax situations for many.
Financial advisors are encouraging clients to consider strategies like Roth IRA conversions, which could be beneficial if tax brackets change in the future. This strategy involves transferring pre-tax retirement funds into a post-tax Roth account, allowing for tax-free growth and withdrawals.
As the election approaches, financial professionals emphasize the importance of having a solid financial plan in place to navigate the uncertainties ahead.