I’m a Retired Boomer: 4 Financial Worries I Have If Harris Wins Election
Presidential election years typically bring stock market volatility and economic uncertainty. Retirees, in particular, worry about everything from inflation to Social Security and the value of their investments. A study from Wealth Enhancement, published Think Advisor, revealed that 80% of Americans, in general, are worried about the impact of the election on their retirement, while 73% of retirees said they are concerned.
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In general, Americans believe the economy will fare better if their preferred candidate wins and will worsen if the other party wins. This type of thinking is not always grounded in fact. Nevertheless, according to retirees and financial experts GOBankingRates spoke with, some of Vice President Kamala Harris’ proposed policies, if they pass, could increase corporate income taxes, capital gains taxes and inflation.
Corporate Taxes Could Reduce the Value of Investments
The Tax Cuts and Jobs Act of 2017 is set to sunset at the end of 2025, and, unless Trump wins the election, it is not likely to be extended or renewed. “If it does [expire], you will likely pay more income tax, and … so will corporations,” explained Mark Malek, CIO of Siebert, a financial advisory firm.
Additionally, Harris has proposed raising the corporate tax rate to 28%, according to NBC News. “That means corporate income will be squelched,” Malek explained. “That is not good, by any measure, for your stock portfolio.”
An article published by The Tax Foundation, a nonpartisan nonprofit organization devoted to tax policy, projected that a Harris win could reduce the long-run Gross Domestic Product by 2% and capital stock by 3%.
Vince Spaits, a retired small business owner in Lehigh Valley, Pennsylvania, hasn’t been impressed with his portfolio during the Biden Administration, and said he fears more of the same.
“The past 3.5 years have been tough financially,” he said. “Nothing like seeing all your retirement accounts plummeting, especially when you retired before this administration, and they were all in the green and going up. Now it’s not good at all.”
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Increased Capital Gains Tax
“The possible capital gains and unrealized capital gains tax implications are just as frightening,” Spaits continued.
Harris has proposed a 28% long-term capital gains tax for those making more than $1 million annually, an increase from the current top rate of 20%. The Vice President has also mentioned taxing unrealized capital gains, according to experts.
“Harris has proposed a 25% tax on unrealized capital gains,” said Adam Ferrari of Phoenix Capital Group. “For retirees, this could mean a higher tax burden on their investments. It would reduce the amount of capital that retirees could draw from and affect their long-term savings, especially if they rely on that for income.”
According to Reuters, Harris’ plan would only tax unrealized capital gains exceeding $100 billion. But this could force high-earning individuals and big corporations to sell stock shares, which could adversely affect the stock market and other investments.
Inflation Could Continue
In a recent survey from CouponCabin, reported by Newsweek, 38% of Americans said they would cut spending significantly if Harris wins the election. Only 24% of Americans said they would do the same if Trump wins. Fears of increased and persistent inflation can cause people to tighten their spending.
While Harris has promised to reduce prescription drug costs for Medicare recipients even further by negotiating prices of medications with the pharmaceutical companies, many retirees fear inflation will mean their dwindling investment funds won’t go as far. Although inflation has slowed thanks to interest rate hikes, prices continue to rise. “Everything is still more expensive than it was last year, and it’s way more expensive than it was four years ago,” Spaits said.
However, some economists debunk this concern: “Voters’ concerns about Harris’ policies may not align with what would actually happen, as these expectations are shaped by their recent experiences with inflation rather than a deeper understanding of future economic trends,” Kevin Thompson, CEO of 9i Capital Group, told Newsweek.
Social Security Could Become Insolvent
Spaits has delayed collecting Social Security and Medicare, relying on his investments, passive income from a business, and his wife’s health insurance through her corporate job. “I’m waiting until full retirement age, which is next year for me, to collect benefits. But will they even be there?” he speculated.
Both Harris and Donald Trump have stated they would protect Social Security benefits. If Trump wins and chooses to eliminate the tax on Social Security benefits, it could leave the Social Security and Medicare trust funds with even less money, reducing tax revenue by $1.6 trillion, according to Forbes. Already, the funds are set to run out of money by 2034, which means only 80% of benefits will be payable. Harris hasn’t yet proposed a plan to safeguard the fund.
“The Senior Citizens League would like to know what the presidential candidates would do, if elected, to address the looming insolvency issue,” Shannon Benton, executive director of the advocacy group Senior Citizens League, told CBS MoneyWatch.
“The Social Security system is facing bankruptcy, and many presidential terms haven’t changed a thing. I don’t think this one issue will change, whoever is elected,” said Jamie Breisemeister, a business owner in St. Louis, Missouri.
Editor’s note on election 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.
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This article originally appeared on GOBankingRates.com: I’m a Retired Boomer: 4 Financial Worries I Have If Harris Wins Election
