How Will the Presidential Election Affect Your Financial Future?

You can’t get through a day right now without hearing something about the presidential election and the Democratic and Republican campaigning that is going on. Between the news, talk shows, debate stages, and the constant updating and interviewing of the huge number of candidates wanting your vote, it’s just inescapable isn’t it?

How Will the Presidential Election Affect Your Financial Future?

How much attention do you pay to it all? Have you taken a look at what each candidate says and stands for? That may have a huge impact on your life, money, and your financial future. Here are some of the big issues that are being talked about that you should consider and may very well influence your choice when you vote in your state primary/caucus and of course next November when you have the chance to vote for President.

Healthcare

All of the candidates have been talking about healthcare, its current state, and what if anything they might do to change things in the future. That has had a big effect on biotech stocks and health insurance companies and will continue to do so in the foreseeable future. What can change and have impact on you (and your investments) are multifaceted.

Democrats want to make healthcare more affordable and point to the fact that drug costs are very high and that drug companies make ungodly profits and are making people choose between food and medicines. This is especially true for seniors. They have also proposed that Canadian drug companies be allowed to sell their drugs in the USA legally which would have a great effect on market prices of drugs and thus the profits of drug companies as the prices are driven downward.

Republicans are talking about repealing the Affordable Care Act known as Obamacare and replacing it with new and various legislation. This is a great concern to health insurance companies who are currently insuring millions more than before Obamacare existed and do not know how changes might impact their companies and profits. This makes their market values fluctuate and thus unpredictable.

For me, healthcare costs represents almost 30% of my budget so I listen carefully to it all. Since you might never know what your health will be like 10, 20, or more years down the road, this is a huge area of concern for almost everyone.

Corporate Taxes

There’s much conversation among candidates about our corporate tax rates and the many large companies who continue to move their worldwide headquarters offshore to avoid corporate income taxes.  The proposals include taxing them despite where they have moved to and collecting the money, to even preventing them from doing any relocating at all and remaining an American corporation. In any event, any change will have some kind of impact on these corporations which then will affect investors and eventually consumers and retail prices.

Estate Taxes

Currently estate taxes in the USA begin on estates of $5.3 million or more. That may not affect all of us, but the candidates are looking at them to see how and what might be changed to collect more money for the treasury. Lowering the threshhold is one consideration being thrown around, as well as increasing the tax rate maximums from 40% to a whopping 65%. Even if you’re not a multi-millionaire, tactics like setting up trust funds or gifting money while alive to your family to avoid estate taxes are commonly used by people to lighten their tax liabilities.These may all be changed depending on which party and/or candidate is in the White House.

Social Security

Fear and worry abound when it comes to the viability of the Social Security system which at the current rate will become insolvent in 2030.

Some candidates want to privatize the system and have the government liability removed from it while allowing funds used and deposited by companies and individuals to be invested in the stock market. While Social Security as it exists currently won’t totally go away in 15 years, reduced benefits are facing those who are and will be retired by then. Since most of us aren’t investment experts, we’d probably have a difficult time insuring our financial well-being just through investments.

Other proposals include doing away with the ceiling on Social Security tax from salaries to collect more funds. Another is increasing the retirement age to 69 and extending the number and years of contributors to the retirement funds.

Some others believe that the best ways to be ready for retirement is to diversify your retirement plan so it includes stocks, dividends, Social Security, additional part time incomes, and passive streams of income to support a good standard of living. While that may be a good idea, it isn’t totally realistic for elderly and sick people to maintain in their senior years.

Minimum Wage

There is a lot of talk about increasing the minimum wage to $15.00 (from the current federal level of $7.25). In fact, in NYC that’s already happened in public jobs. The candidates are on one extreme to the other about this and it will affect all of us if it occurs.  With 46 million Americans currently living in poverty (the highest number ever at 15%), this is one way to improve lives. But it begs the question, “How will it affect business and retail prices for all Americans?” That’s one good reason to study the candidates’ proposals to make sure you are in alliance with whatever they propose.

 

There are many more talking points that you must consider when you are planning to vote in what just may be a monumental and historic election. Everything from immigration reform to climate change, from terrorism to foreign policy in the Middle East, from banking regulation to job creation, all of the candidates are speaking out as to their own methods of making America ready for the next generation and the prosperity and safety of the country. Since the world is more complex today than ever before, it’s imperative to pay close attention and no matter who you wind up supporting make the best decision you can by listening to the arguments and facts.

One last note: we sometimes have a tendency to give presidents a little too much credit for the results in our economy over the years. Since 1900, only 4 of our presidents have seen an economic downturn during their terms (Hoover, being the worst at -19.5% in 1929). The others have seen economic upturns in the stock markets from 2% to as much as 29% (Coolidge).  The differences between Democrats and Republicans are sometimes nonexistent, and it may come down to trust and perceived honesty.

I personally think that economic are more dependent on the relationships between congress and the president being of the same party and the Fed who controls monetary policy as well as the cyclical nature of it all. After all, if any candidates really knew how to make our economy prosper continuously, wouldn’t it always be that way? With other countries in the world so influential these days, we may never again be the influence over our own lives as we were during the period from 1850 through 1960.  The Third World is developing at record rates and countries like China and India can influence us more than ever before. That is a hard reality to get used to.

It’s worth repeating, no matter what it is that you feel is most important or is of concern to you, it’s important to listen and educate yourself and of course vote your choice in the elections. Be sure that you’re registered, and if you won’t be able to vote in person on election day, be sure to request your absentee ballot.

Do you pay attention to the politics of financial America in 2016? What do you for see as the best plan for yourself to be ready when retirement arrives?

Image courtesy of chatchai_stocker at freedigitalphotos.net (with changes)

6 Comments

  1. NYS minimum wage is now $9 as of the new year. I do pay attention to politics. It tough to keep track of everything will so many candidate right now in the race for nomination for President. Once the dust settles and we have candidates for each party it will be easier to get a handle on who might be the best overall.

  2. Emily @ JohnJaneDoe

    Nice roundup of the basic questions in the major domestic financial policy areas, Gary. I do wonder what will happen with healthcare in 2017,as no matter who wins, the election will happen after the start of open enrollment. Since we have an ACA policy, this is a big concern for our family.

    I will say the current level of discourse in the election, and focus on ideological purity on both sides rather than consensus-seeking, are highly disheartening. I would love to see someone try to build bridges instead of force standoffs.

    1. It seems that the nature of politics in the 21st century has become very confrontational. The parties themselves have divided into such a spectrum of diverse opinions that getting a consensus for anything seems almost impossible. I think we’re all hoping that that is only a short term problem. That’s why it’s so important to listen carefully to what they’re all saying before you vote.

  3. Good stuff. You’re right – I can’t go a day without hearing about the political scene. However, in my humble, humble opinion, minimum wage isn’t the problem. Only a small part of the population is on minimum wage. MEDIAN wage is the problem. The bulk of the country’s earners are in the middle, so if the average American family is struggling more than ever, that’s a bigger problem. Sticky stuff :/

    1. I would agree that the middle class is certainly suffering especially since the market crash in 2008. But we also have to look at those who are at the lowest income levels and realize that the wages that exist currently just don’t give those earners even the slightest chance of being able to support themselves. Raising the minimum wage seems to be one way to help support them.

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