All presidencies are different, but they share one thing in common: change. Even when the same political party remains in control of the executive branch, the new president always has a new platform or agenda that they want to implement. When a new political party takes power, the changes can be dramatic.
Such is the case in 2021 as the Democrats have reclaimed control of the Oval Office from the Republicans. Whether you voted for President Joe Biden or not, the changes that he intends to implement will affect all Americans. Although Biden’s policy proposals won’t go into effect until they are signed into law, he has made clear the agenda he is pursuing, and with a Democratic House and Senate, much of it could come to fruition.
Here’s a list of steps you can take to help position yourself for any potential financial changes under the new president. Some of these steps can apply to any presidential changeover, while others are specifically tailored to policies that Biden has proposed. Before you embark on any major financial changes, you may want to consult with your tax or financial advisor.
Buy a House
You don’t always want to buy a house when there’s a new presidential administration, but in 2021, you might want to consider it. In addition to the fact that interest rates are at all-time lows, making housing overall more affordable, the Biden administration wants to encourage first-time buyers with further incentives. Although the proposal will have to pass Congress, Biden wants to grant a $15,000 credit to first-time homebuyers. This amounts to about 5% of the median house price in the U.S., currently around $300,000. This credit could make home buying much more affordable for many.
Buy Clean Energy Stocks
Every incoming administration has legislative priorities that are at the top of their agenda. For the Biden administration, clean energy is near the very top of the list. Biden has proposed investing billions of dollars in clean energy technology, which might be enough to finally push this industry to the forefront of the American economy. Although there will be winners and losers, just as in any industry, the start of the Biden presidency is a great time to start doing your research into your favored clean energy stocks.
Find Out: 30 Jobs That Didn’t Exist 30 Years Ago
Invest In Your Own Clean Energy
You don’t just have to buy clean energy stocks to benefit from the Biden administration. There is hope that Biden will push through additional credits for buying electric vehicles. Indeed, part of Biden’s climate plan is to “restore the full electric vehicle tax credit to incentivize the purchase of [electric] vehicles.” The government still offers financial support for those installing home electric chargers, so perhaps vehicle credits are not far behind.
Look For Your Stimulus Check(s)
Incoming presidential administration’s often try to push through costly stimulus packages during their first two years in office, and the Biden administration is no different. On top of the two stimulus checks already approved during the Trump administration, Biden has proposed a plan to send an additional $1,400 to eligible Americans. If you haven’t received your second check yet, follow up on when it’s coming by using the IRS’ “Get My Payment” tool. In the meantime, keep your eyes and ears open for additional stimulus checks coming once Biden takes office. It’s also entirely possible that additional stimulus will arrive later in 2021.
Refile for Unemployment
Unemployment legislation doesn’t often change with new presidential administrations. However, 2020 and 2021 have been anything but usual thanks to the global coronavirus pandemic. In 2020, the Trump administration pushed through $600 weekly federal unemployment benefits, followed by a renewal at the $300 level later in the year. If you’re still in need of unemployment funds, the Biden administration has proposed raising those benefits to $400 per week and extending them all the way through September 2021. One of the first things you may want to do if you’re still unemployed in 2021 is check the status of these newly proposed and enhanced federal benefits.
Related: Surprising Unemployment Tax Tips
Review Your Student Loans
Thanks to the COVID-19 pandemic, many borrowers were able to put their student loans into forbearance. While that temporary reprieve may have been a great boost to your cash flow, you’ll still have to ultimately repay what you owe, including interest. But in the era of the Biden presidency, you might find that $10,000 or more of your student loans may actually be canceled by the government, and sooner rather than later. Biden has declared that he will ask Congress to forgive up to $10,000 in student loans per borrower, and it will likely be prioritized during his first year in office. As nearly one-third of student loan borrowers owe $10,000 or less, this would completely wipe out student debt for a large segment of the population.
Review Your Health Insurance
It’s a good idea to review your health insurance at the start of every year, and it’s particularly important when there’s a new administration in Washington. Presidents have a fondness for tinkering with the healthcare system, so it’s important to pay attention to changes that are being discussed. If you’re a fan of Obamacare, you likely won’t have to make many changes to your healthcare under the Biden administration, as the system came to be during his tenure as vice president. However, if you were hoping for a repeal of the Affordable Care Act, you might have to plan on that insurance system remaining in place for the foreseeable future.
Find Out: When Can You Deduct Medical Expenses?
Check Tax Brackets and Capital Gains Exposure
Just as with healthcare, tax brackets are another favorite presidential target, so when there’s a new president coming in, you can expect at least minor changes. Biden has an ambitious domestic agenda, so to pay for some of that spending, tax rates are going up in some areas. However, Biden has pledged that tax brackets will only expand for those earning at least $400,000, from the current 37% to 39.6%. Other tax changes are coming, such as the taxation of capital gains as ordinary income for those earning at least $1 million, but in terms of actual tax brackets, that is the only proposed change thus far.
Rebalance Your Portfolio
You should rebalance your portfolio at least annually, and if there’s a new president in town, you might want to take an extra look. Presidents often have agendas different from their predecessors, and this is particularly true in the case of Biden vs. Trump. As such, the stocks that you may have made a lot of money on under the Trump administration may fall out of favor under the Biden administration, and vice versa. Of course, the stock market is not that black and white, but that is the purpose of rebalancing, to make sure that your portfolio is in line with your investment objectives and risk tolerance no matter who is sitting in the Oval Office.
Check Your Retirement Plan Benefits
Just like with your investment portfolio, it pays to review your retirement plan benefits at least annually, and especially during a presidential changeover. In 2021, there may be some relatively dramatic changes coming to your retirement plan, if the Biden administration proposals come to pass. Biden has suggested replacing the tax deduction on contributions to retirement plans with a tax credit that goes straight into your retirement account. So, for example, instead of being able to write off $10,000 in 401(k) contributions and earning a tax break of, say, $2,500, the Biden plan proposes no tax write-off at all. Instead, a $2,500 credit would be deposited straight into your account, something like a matching contribution. If this type of legislation was to become law, you might have to rethink your retirement and tax planning altogether.
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