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3 Big Financial Worries For Americans Ahead Of The Presidential Election
~3.1 mins read
As the U.S. presidential election approaches, a majority of American investors are worried about how it could affect their personal finances.
The most recent MassMutual Consumer Spending & Saving Index report showed that 86% of those surveyed were concerned about the impact of the presidential election on their “day-to-day finances.” About a quarter of respondents said that personal finances are the most important factor in deciding who to vote for in November's contest between Republican candidate Donald Trump and Democrat Kamala Harris.
Most of the worries, according to other surveys and financial advisors, revolve around what a new administration could mean for retirement plans, stock market performance and tax policy.
"For those feeling concerned about the election, I’d encourage them to talk with their advisor to ensure their financial plan is built to last, regardless of who’s in office,” said Ayako Yoshioka, a Portfolio Consulting Director at Wealth Enhancement.
A recent survey by Wealth Enhancement showed that 80% of respondents expect the election to affect their retirement plans in some way.
Some investors are also worried about how the outcome of this election could influence how much they can rely on programs such as Social Security and Medicare and what the incoming administration would do about high prices.
Even though inflation has come down, prices of many goods and services remain elevated. Roughly half of all people surveyed said that high inflation derailed their plans for retirement, delaying it by 8.5 years on average.
Financial advisors fielding questions from their anxious clients are telling them that some turbulence may be expected.“While there is technically some type of uncertainty involved with elections, it's relatively short-lived,” said Megan Gorman, Managing Partner at Chequers Financial Management, adding that advisors can help investors “tune out the noise and stay focused on long-term goals.”
Markets may temporarily react to big news, election outcomes included. Nearly a quarter of respondents in the Wealth Enhancement survey worried about how stock markets would fare after the elections and what it would mean for their portfolios.
Jamie Bosse, a Kansas-based CFP at CGN Advisors, notes that despite volatility in election years, the majority of the past presidential election years have generally yielded positive market returns.
“We’ve had 24 election years [since 1927]. And out of those 24, only four of those election years had negative [annual] market returns,” Bosse said. The four years with negative returns—1932, 1940, 2000, and 2008—included the Great Depression in 1932 and the Great Recession in 2008.
In fact, according to a T. Rowe Price analysis for data going back to 1927, there's not much difference in the average annual returns for the S&P 500—a barometer index for U.S. stocks—for election years (11%) compared to non-election years (11.6%).
"We believe that investment decisions should be based on longer‑term fundamentals, not near‑term political outcomes,” researchers wrote in the T. Rowe Price analysis. “Trying to time the market based on short‑term dynamics, political or otherwise, is extraordinarily difficult.”
Both Bosse and Gorman have had clients ask them about the future president’s tax policies. And with good reason.
The Tax Cuts and Jobs Act (TCJA) is a 2017 law that lowered income tax brackets, increased the standard deduction, and raised the estate tax exemption, among other things. The law is set to expire December 31, 2025, and if Congress doesn’t act, it could make taxes even more complicated for some people.
Gorman's high-net-worth clients are particularly concerned with TCJA provisions related to the state and local tax (SALT) deduction cap and the increased estate tax exemption.
Catherine Valega, a Boston-based CFP at Green Bee Advisory, said she’s been talking to clients about considering a Roth IRA conversion before income tax brackets potentially change.
In this strategy, you move your pre-tax retirement money from a traditional IRA into a post-tax Roth account. You may have to pay income tax at the time you convert, but the money would grow and withdrawals would be tax free. Such a conversion can prove to be a tax efficient if you expect to face higher taxes in the future.
“Conversions are important to think about,” Valega said, adding that investors should think about questions such as: Do we do them this year? Can we squeeze them in next year? What do our tax budgets look like?
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Panama Releases 65 Detained Migrants From US Amid Criticism
~2.0 mins read
Group of 65 migrants reaches Panama City after being released from the Darien, a dangerous jungle region near Colombia. Panama has released 65 migrants who were held for weeks in a remote camp after being deported from the United States, telling them they have at least 30 days to leave the Central American nation. Authorities said the people released on Saturday will have the option of extending their stay in Panama up to 90 days if needed, allowing them to begin the legal process for resettlement or voluntary return to their homeland. The group was released from the Darien, a dangerous jungle region near the border with Colombia and a key transit route for many migrants crossing from South America on foot. They had been in the camp since mid-February after their deportation from the US. Rights groups argue the release was a way for Panama to wash its hands of responsibility amid mounting human rights criticism. Many of the released migrants say they were fleeing violence and repression in China, Russia, Pakistan, Afghanistan, Iran, Nepal, and other countries. As part of the US administration’s policy of ramping up migrant deportations, Panama reached a deal with Washington under which it received the deported third-country migrants, taking over the responsibility for their repatriation or resettlement. Immigration advocates and rights groups have denounced the arrangement as cruel, as it allows for the US to export its deportation process. The agreement also prompted human rights concerns when hundreds of deportees detained in a hotel in Panama City held up notes to their windows pleading for help and saying they were scared to return to their countries. Under international refugee law, people have the right to apply for asylum when they are fleeing conflict or persecution, and they cannot be forcibly sent back home. Those deported migrants who refused to return to their home countries, however, were sent to Darien, where they spent weeks in poor conditions, had their phones taken away, were unable to access legal counsel and were not told where they were going next. Among those who got off one of the buses carrying the released migrants on Saturday was 27-year-old Nikita Gaponov. He fled Russia due to repression for being part of the LGBTQ+ community and said he was detained at the US border but not allowed to make an asylum claim. Hayatullah Omagh, a 29-year-old who fled Afghanistan in 2022 after the Taliban took control, was released on Saturday and is also in legal limbo, scrambling to find a path forward without having to return to his homeland. “I can’t go back to Afghanistan under any circumstances … It is under the control of the Taliban, and they want to kill me. How can I go back?” Panamanian authorities also denied accusations of ill-treatment of the migrants, but blocked journalists from accessing the camp and cancelled a planned press visit last week. Follow Al Jazeera English:...
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Crypto.com Sues SEC Over Crypto Regulation After Wells Notice
~1.1 mins read
Cryptocurrency exchange Crypto.com on Tuesday sued the U.S. Securities and Exchange Commission (SEC) over concern that the SEC's actions overstep legal boundaries and undermine the future of the crypto industry in the U.S.
According to Crypto.com, the lawsuit follows a Wells Notice issued in August by the SEC to the company, which is a letter that indicates the SEC's intention to bring an enforcement case against the crypto startup.
The crux of Crypto.com's lawsuit contends that the SEC has unilaterally expanded its jurisdiction beyond the limits established by law, particularly by classifying most crypto transactions as securities dealings.
The company contends that this regulatory position is applied inconsistently, exempting bitcoin (BTCUSD) and ether (ETHUSD) despite their perceived similarity to other crypto assets. Crypto.com also emphasized in the suit that the SEC bypassed key procedural steps, including the notice and comment rulemaking requirements under the Administrative Procedure Act.
By filing this suit, Crypto.com said it aims to halt what it views as the SEC’s "unlawful" campaign against the crypto industry.
Additionally, Crypto.com has filed a petition with the Commodity Futures Trading Commission (CFTC) and the SEC to establish a clearer regulatory framework for cryptocurrency derivatives in the U.S.
Blockchain technology firm Consensys also filed a preemptive lawsuit against the SEC earlier this year after receiving a Wells Notice.
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