In their most recent debate, the Republican candidates for president barely mentioned retirement, and they might have missed an opportunity to appeal to voters. Nearly nine in 10 Americans gave politicians a grade of “C” or worse when asked to grade their efforts to help Americans save for retirement, according to a 2015 poll by Charles Schwab.
Among those surveyed, nearly 70 percent said that Americans’ ability to save for a comfortable retirement should be a major public policy focus, and the same percentage want to see it addressed in the debates.
Whether the 2016 presidential candidates want to talk about it or not, the election and its outcome will affect your retirement plans. Here are 10 ways how.
1. Your Retirement Accounts Could Do Better in the Short Term
The Standard & Poor’s 500 index has risen in 13 of the 16 election years since World War II, and it gained more than 13 percent during the last presidential election in 2012.
Still, markets dislike uncertainty, and elections are inherently uncertain. That means the U.S. will probably see continued volatility through the next two years. Rather than adjusting your investments based on the election, pick an asset allocation plan that you’re comfortable with and stick with it through the market’s ups and downs.
“I don’t recommend trying to market time or shifting to cash to wait things out,” said Matt Carbray, a certified financial planner and partner at Ridgeline Financial Partners. “That’s just not a prudent strategy.”
2. You Might Have to Retire Later
As it currently stands, Social Security will only be able to pay full benefits for the next 20 years, so lawmakers will have to reform the system in some way in order to keep it solvent for future generations. For several Republican candidates — including Jeb Bush, Chris Christie, Marco Rubio, Ted Cruz, and Rand Paul — the solution is raising the age at which Americans can receive full retirement benefits.
Full retirement benefits currently start between ages 65 and 67, depending on your birth year, but you can start collecting at a lower rate as early as 62. Based on Social Security Administration data from 2014, the Motley Fool reported that the average worker starts collecting benefits at age 64.
The candidates who want to increase the minimum age for retirement benefits have pledged to do so in phases that would not impact those who are currently close to retirement age. “If you’re 55 and older, nothing is going to change,” said Joe Heider, founder of Cirrus Wealth Management in Cleveland. “But if you’re in your 40s or below, Social Security could be revamped in a fashion that could dramatically impact your retirement.”
3. Your Social Security Payments Will Change
Whether you could get more or less in benefits depends on who’s elected. Most Republicans, including Christie, Rubio, and Paul want to cut benefits, either by decreasing the amount you receive or by introducing a means test, which would phase out benefits for the wealthiest retirees.
Christie’s plan, for example, would begin to phase out payments for people with non-Social Security income of $80,000 and eliminate them for people making more than $200,000 per year. In a speech explaining the plan, he said, “If you are fortunate enough not to need [Social Security], you will have paid into a system that will continue to help Americans who need it the most.”
Democrats, on the other hand, want to expand Social Security benefits. Bernie Sanders, for example, would eliminate the cap on Social Security payroll contributions, which currently phases out for people making more than $118,500. Sanders claims eliminating the cap would allow workers to receive about $65 more each month and increase the cost-of-living adjustment, which allows for an annual inflation-based increase in checks.
Hillary Clinton has said that lawmakers shouldn’t “mess with” Social Security. “We do not pretend it’s a luxury — because it is not a luxury,” she said at a campaign speech in New Hampshire in April 2015. “It is a necessity for the majority of people who draw from Social Security.”
4. You Might (Finally) Be Able to Earn Interest on Your Savings
For those close to or already in retirement, the low interest rate environment that has been present for the past decade has been brutal. Interest income from personal savings is the second-most common source of income for seniors after Social Security, with 46.5 percent of those over age 65 receiving some interest income. The median interest income, however, was a mere $255, according to a 2012 AARP report.
In addition to paltry returns on savings, low interest rates have led to underfunded pensions and low rates on fixed annuities, all of which have hurt baby boomers’ retirement plans.
Related: 42 Ways to Save for Retirement
Although the next presidential candidate won’t be able to directly decide when and how much to raise interest rates, he or she will likely be able to exert some influence as the Federal Reserve increases rates. Plus, Fed Chair Janet Yellen’s term expires in February 2018, and the next president will decide whether to renew her position or select a different member of the board of governors to replace her. In recent history, several Fed chairs have sat for consecutive terms.
Donald Trump said that although he has “always loved” low interest rates as a developer, he worries that they can be “creating a bubble, and the bubble could explode,” according to Bloomberg. Meanwhile, Sanders praised the Fed’s September decision not to raise rates in a statement he released on his website.
5. But Your Bonds Will Go Down in Value
Bond prices move in the opposite direction of interest rates, so if rates go up, the value of bonds in your portfolio will decline. That’s bad news for retirees or near-retirees who tend to have a larger portion of their portfolios allotted to bond funds, which have traditionally been a safe haven.
“That conservative vehicle that you have had is not going to feel very conservative once rates start to rise,” said Mark Friese, a senior vice president at The Menick-Friese Group, a wealth management firm.
Shorter-term bonds tend to be less susceptible to interest rate shifts, so you might want to consult a financial advisor about whether to move some of your bond holdings.
6. You Might Not Be Able to Rely on Medicare
Like their plans for Social Security, the candidates’ proposals for Medicare, which provides public insurance to most of the country’s retirees, run the gamut. Bush said that Medicare — which faces projected deficits — can’t exist in its current form for the next generation, according to The Washington Post.
Trump has criticized proposals to cut it back, saying at a New Hampshire Republican leadership summit that “it’s not fair to the people that have been paying in for years and now all of the sudden they want to be cut.”
7. Your Tax Rate Will Change
Most of the leading candidates have put forth tax reform plans that would ultimately impact retirees, but the impact depends on your income level and what type of income you receive. When it comes to ordinary income, Bush, Christie, Rubio, and Trump would simplify the code by establishing fewer tax brackets, whereas Ben Carson, Cruz, and Paul prefer flat taxes, according to TaxFoundation.org. Most Republicans would lower or eliminate capital gains taxes, but Clinton and Sanders would increase it.
8. You Might Be Able to Save More
Increasing wages could free up money for Americans to put into their 401ks. “It is especially important that we raise wages for all workers, because when 70 percent of us are making the same or less than we were 12 years ago, fewer and fewer of us will be able to save enough for a secure retirement,” Democratic candidate Martin O’Malley wrote in an article for The Quad-City Times.
While the minimum wage debate has become a high-profile issue, some candidates want the minimum wage to stay at $7.25, but Clinton has supported an increase to $12, and Sanders wants to see $15 per hour.
9. You Might Get Better Investment Advice
If passed, a rule currently proposed by the Department of Labor would hold brokers that work with 401k participants or individual retirement account investors to a fiduciary standard, which means that they would need to put a client’s best interests first rather than simply putting the client in merely suitable investments — ones that could potentially net them commissions.
The proposal has met with opposition from some in the financial services industry, and even if the current administration manages to pass it before Pres. Barack Obama leaves office, it will be up to the next president to decide how it’s enforced.
“If it’s a democrat, they’ll probably keep it, but if it’s a Republican, they’ll probably kill it,” said Chad Parks, CEO of Ubiquity Retirement + Savings, a retirement planning services provider based in San Francisco.
10. You’ll Probably Have to Pay More for Home Care
Several of this election’s hot-button issues, such as immigration reform and minimum wage, will have a direct impact on the cost of in-home care that many retirees rely on in order to remain in their homes rather than going to assisted living or nursing home facilities. Skilled care positions are disproportionately filled by immigrants and people who earn minimum wage, factors that have helped maintain prices for those who need care, said Jeff Salter, founder and CEO of Caring Senior Service in San Antonio.
“You can’t just raise the price on these services,” Salter said. “We’re not dealing with wealthy people. If the prices increase dramatically, it’s going to become really challenging for them to remain at home safely.”