4 Ways Middle-Class Retirees May Be Affected If Kamala Harris Wins the Election
Written by
Brooke Barley
Edited by
Rebekah Evans
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The past week was a whirlwind in the political world. President Joe Biden officially dropped out of the 2024 presidential race. He endorsed Vice President Kamala Harris to take his place on the ticket.
Although there is a chance that Harris is not the Democratic candidate for president, she already has gotten enough delegates to get the nomination. The Democratic National Convention starts on Aug. 19, but the party is expected to take a virtual vote as early as Aug. 1 to nominate Harris.
This kind of a shakeup can have a ripple effect on the American economy. Those who are in the middle class (households earning roughly between $50,000 and $150,000) and are retired are wondering: How will a Democrat in the White House affect me?
Though that’s what we’ve had for the past four years, it wouldn’t be the same Democrat, so it’s important to consider what economical changes we could expect with a new nominee. Read on to see what experts had to say about what a Harris win likely would mean for middle-class retirees.
Also see what Harris could mean for Social Security specifically.
Trump Tax Cuts Would Expire
For many policies, experts are assuming the Democratic nominee will carry through Biden’s proposed plans.
“For the Harris Campaign, her proposals will seemingly be heavily influenced by the Biden budgets and proposals over the years,” said Jim Ronan, a lecturer with the department of political science at Villanova University.
This makes sense with Harris being Biden’s VP. David Schultz, professor of political science and legal studies at Hamline University, agreed with Ronan, saying we’ll especially see more of Biden’s policies when it comes to taxes.
“Biden had pledged to let the Trump tax cuts expire and wanted to raise taxes on upper-income earners,” Schultz said. “It is not clear yet where Harris is on this issue, but it is probably similar to Biden.”
The Trump tax cuts, which came from the Tax Cuts and Jobs Act (TCJA), are set to expire in 2025, and Biden was going to let that happen. How did TCJA affect the middle class? It increased the standard deduction for payers to take on taxes. It also lowered the income tax rate. Though this last part might not affect all seniors, it could affect some: TCJA increased the amount of the Child Tax Credit.
Biden’s tax plans focused on raising taxes for those making more than $400,000 a year and imposing a 25% tax on Americans with net worths of more than $100 million. Retirees in the middle class are not going to fall into these two categories, so their taxes likely would remain unchanged unless they previously benefited from TCJA.
However, even if the middle class isn’t feeling the tax changes directly, they still could suffer the consequences.
“Harris’ proposed tax increases on corporations and high earners could potentially slow economic growth, which might impact stock market returns.” said Raf Pereira, the founder of Stocks.News.
Medicare Would Be Expanded
“While the official Democratic platform won’t be finalized until the convention in August, we can safely assume it will contain pledges to expand Medicare via the increased tax revenue from higher earners and to ensure the safety of Social Security,” Ronan said.
There are two key pieces Ronan is referring to that are very important for retirees. One is the expansion of Medicare. Continuing to do this would build on Biden and Harris’ plan rolled out this year that expanded access to Medicare Advantage and Medicare Part D.
Under Biden’s plans, seniors would pay less for prescription drugs, get free vaccines and see their out-of-pocket costs for prescription drugs capped at $2,000. These changes would be observed starting in 2025.
Pereira said this could be extremely beneficial for those looking to retire.
“I had a client who delayed retirement due to healthcare concerns, but under an expanded Medicare system, she might have been able to retire two years earlier.”
Social Security Would Be Protected
Going back to Ronan’s second point, a Democratic president most likely would make sure Social Security was being protected so that future retirees could reap the rewards.
President Biden was against any proposals to cut Social Security benefits. Instead, he would use revenue from taxes on high earners to back Social Security. Biden is also a proponent of increasing Social Security benefits for seniors and those with disabilities.
Pereira mentioned that stock market returns might decrease. But, with adequate Social Security earnings, this might not feel as rough for some retirees.
“In my experience managing retirement portfolios, even a 1% decrease in average annual returns can translate to thousands less in retirement income over time,” Pereira said. “That said, [Harris’] proposed expansion of Social Security benefits could offset some of this impact for middle-class retirees.”
Isabella Brown, a politician and campaign manager with Qualify Candidates, said that if Harris is the Democratic nominee, middle-class retirees could see very positive changes when it comes to Social Security.
“Kamala Harris has suggested policies that intend to expand the social safety net while backing middle-income families,” Brown said. “This entails plans to improve Social Security benefits and modify cost-of-living adjustments so that they could better meet retiree needs. These steps may in turn help seniors live more comfortably in their old age through maintaining consistent earnings for them and reducing the risk of running out of savings.”
Pereira said that, no matter who wins, it’s important to make sure your money isn’t tied up in just one place.
More Economic Growth
Brown said middle-class retirees might see significant growth in the American economy during a Democratic presidency.
“Increased investments in infrastructure and education might drive economic growth, thereby benefiting retired individuals through an improved economy,” she said.
“Ultimately, I’d advise my retiring clients to diversify their portfolios and not rely too heavily on any one income source, regardless of who wins the election. Political landscapes can shift quickly, but a well-balanced financial plan can weather various economic scenarios.”
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. For more coverage on this topic, please check out 3 Ways Middle-Class Retirees May Be Affected If Trump Wins the Election.
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