How will the 2008 election impact your money?Written by Nolan Baker Mark Clair | | firstname.lastname@example.org
History has shown that the stock market reacts in the short term to events going on in our country and world. With Election Day approaching, combined with shaky economic conditions, many are wondering how this election will affect their investments and retirement savings. How will the stock market react when the votes are in?
The stock market: Democrat or Republican? Is it better for the stock market to elect a Democrat or Republican? After doing some research, we found that the average annualized rate of return of the S & P Stock Index when a Democrat has been in office is 8.9 percent. While Republicans were in office, including the Great Depression years of Herbert Hoover, the S & P has averaged 0.4 percent.
Take out the Hoover years, and the Republican average has been 4.7 percent. So it appears that if you want the stock market to do well, history has shown that it is better to elect a Democrat.
Taxes: Democrat or Republican? What about taxes? How should we vote in order to pay less? Obviously making more money is great, but a consequence of higher income can be a higher tax bracket. Do you want to give more each year to Uncle Sam? I think most would answer a resounding no!
Let’s look for a moment at some historical tax rates under past presidential administrations. Under the current Bush administration, for a married couple filing jointly, the income tax rates range from a low of 10 percent to a high of 35 percent. Bush lowered taxes from the Clinton rates of 15 to 39.6 percent.
Under George H.W. Bush, the rates were 15 to 31 percent. The first Bush initially lowered taxes to a range of 15 to 28 percent and then raised them slightly. During the Reagan years, the income tax rates ranged from 0 to 50 percent, down from the Carter years of 0 to 70 percent. You had to make more than $215,000 to get taxed at 70 percent, which was a lot of money back in the 1970s but, wow, 70 percent? That seems like a lot. So you want to pay less in taxes? It appears the best bet is to elect a Republican.
Will taxes go up or down under our new president? Where do our current candidates stand on taxes? McCain proposes lowering taxes across the board, but Obama argues that the bulk of McCain’s tax cuts will benefit the wealthy.
Obama proposes lowering taxes for middle-to lower-income taxpayers and raising taxes on the wealthy (those individuals or families making $250,000 or more per year). Obama says that his plan will cause higher income people to pay more of their “fair share,” and McCain says that Obama’s plan will have a negative effect on small-business owners resulting, in an increase in unemployment and reduction in the creation of new jobs. Who should we believe? Oprah? Joe the Plumber?
What to do? The wisest thing to do is to educate yourself as much as you can before entering the voting booth. Examine the issues closely and vote for the candidate that you think will be better for the country in the long term.
The policies of the candidate elected will have an effect on you and your family and generations to come. It is an important decision that we all must take seriously.
Postelection game plan. Keep in mind that we are not giving you tax advice and you should always consultan an accountant. Yet, no matter who wins the election, you will be affected in some way by the outcome.
There is no better time to get together with a qualified adviser and re-evaluate issues like risk tolerance, income taxes, retirement savings, investment choices, income requirements, estate taxes, probate and more. A comprehensive game plan can help you be prepared to weather a storm like we are experiencing today and help you be successful in reaching your retirement goals. Take action for a better tomorrow by getting out and voting, and by meeting with your adviser for a postelection planning session.
For more information about today’s column and The Retirement Guys, tune-in every Saturday at 12 p.m. on 1230 WCWA and every Sunday at 11 a.m. on 1370 WSPD or visit www.retirementguysradio.com. Securities are offered through NEXT Financial Group Inc., Member FINRA / SIPC, 7135 Sylvania Ave, 2B, Sylvania.