How Stable Would Your Retirement Savings Stay Under a Kamala Harris Presidency?
Written by
Laura Beck
Edited by
Levi Leidy
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If you’re building your retirement nest egg, you might be wondering how a Kamala Harris presidency could affect your savings. GOBankingRates spoke to experts to break down what her policies might mean for your retirement fund.
Here’s how stable your retirement savings would be under a Harris presidency.
Tax Changes and Your Retirement Accounts
Vice President Harris has some big ideas about taxes that could impact your retirement savings. Anthony Saccaro, president at Providence Financial & Insurance Services, explained. “Harris aligns with President Biden’s plan to raise taxes on individuals earning over $400,000 annually, positioning this as a solution to address the looming Social Security crisis,” he said.
What does this mean for your retirement savings?
- If you’re a high earner, you might have less money to put into your 401(k) or IRA due to higher taxes.
- On the flip side, if these tax increases help shore up Social Security, it could provide more stability for that part of your retirement income.
However, there might be a potential catch. “These changes would effectively reduce consumer and corporate spending power, potentially leading to lower corporate revenues or necessitating price hikes to maintain profitability, which could spur inflation,” shared Saccaro.
In other words, while your Social Security might be more secure, your personal retirement savings might not stretch as far if prices go up.
Stock Market Effects on Your Retirement Portfolio
Harris has proposed some changes that could shake up the stock market, including:
- Increasing capital gains taxes from 20% to 28% for high earners
- Raising the stock buyback tax from 1% to 4%
These changes could potentially affect the stock market. If you’re close to retirement, it’s something to keep an eye on. Big market swings can have animpact on your retirement savings, especially if you need to start withdrawing money soon.
Estate Taxes and Your Legacy Planning
If you’re planning to leave a very significant inheritance, Harris’ proposed changes to estate taxes could affect your strategy. As president, she wants to lower the estate tax exemption, which means more estates would be subject to taxes. In simpler terms: If you have a ton of money to leave to your heirs, this might affect that amount.
401(k) Changes: A Potential Boost for Low- and Middle-Income Savers
Harris has proposed switching the tax benefit for 401(k) contributions from a deduction to a credit. This could significantly boost retirement savings for low- and middle-income earners. For example, a low-income earner in the 12% tax bracket could see their tax benefit for a $1,000 contribution increase from $120 to $1,000. This could be a huge boon for retirement savings.
Immigration Policy and Its Impact on Retirement Savings
Kamala Harris’s approach to immigration could have unexpected effects on retirement savings. “Harris is likely to pursue a more lenient immigration policy compared to her opponents,” said Saccaro. “This approach could lead to an influx of workers into the labor force, helping normalize the labor market.”
This could potentially help Social Security by increasing the number of people paying into the system, as well as an increased demand for housing, which could be good news if you’re counting on your home equity as part of your retirement plan.
A Reality Check
Regardless of who wins the presidency, Ron Surz, co-host at Baby Boomer Investing Show, offered this advice: “Protect your savings because you are in the ‘Retirement Risk Zone’ when sequence of return risk is a serious threat. Losses now could ruin the rest of your life. The election doesn’t change that.”
The Final Word for Your Retirement Savings
Under a Harris presidency, your retirement savings could face the challenge of some potential market volatility that could affect your investment returns in the short term, higher taxes if you are in a higher tax bracket and potential inflation. On the other hand, you might also see a strengthening of Social Security and increased tax benefits for retirement savings, especially if you’re in a lower tax bracket.
Remember, presidential policies are just one factor affecting your retirement savings. The best strategy is to continue saving consistently, diversify your investments and consider talking to a financial advisor about how to protect your nest egg, no matter who’s in the White House.
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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