Andrew Lisa
Aug 6, 2024
To learn how a Harris presidency could impact the plans of boomers eyeing a 2025 retirement, GOBankingRates consulted two financial planners, DeLuca and Michael Collins, CFA, and CEO and founder of WinCap Financial.
“Always look at your financial plan,” said DeLuca. “It does not matter if there is a new president. Every six months, a financial plan should be revisited and adjusted as need be.”
The article discusses the potential impact of Kamala Harris becoming the Democratic presidential nominee and the implications for baby boomers planning to retire in 2025.
Key Points:
Transition to Harris: With President Biden's potential departure from the nomination, Vice President Kamala Harris could become the Democratic standard bearer. If she wins, she will have less than four months to address voters, particularly concerning their retirement plans.
Pre-Election Planning: Anthony DeLuca notes that while Harris's policies on retirement benefits won't immediately affect those retiring in 2025, it’s crucial for them to prepare for potential changes. “Information moves fast, and we are still absorbing its impact,” he says. DeLuca suggests that it’s unlikely Harris would significantly deviate from Biden’s policies, emphasizing the need for high-income earners to focus on economic factors.
Impact on Taxation: DeLuca anticipates that Harris might let the Tax Cuts and Jobs Act (TCJA) expire, which would increase the top personal income tax rate to 39.6% for high earners and raise the corporate tax rate to 35%. “One of the biggest potential changes would be the removal of the Tax Cuts and Jobs Act (TCJA),” he explains, noting that the TCJA primarily benefited the top 1% with significant tax savings.
Capital Gains and Estate Taxes: DeLuca points out that Harris might follow Biden’s proposed policy of taxing long-term capital gains and dividends as ordinary income for those earning over $1 million. Additionally, he notes Harris’s stance on increasing estate taxes on the wealthy to fund education: “Kamala Harris has stated herself that she would raise estate taxes on the wealthy and redirect this money to teachers.”
Market Reactions: DeLuca believes that market reactions to presidential policies are less significant than those to central bank actions. “What’s vastly more important is the economic numbers the Federal Reserve is seeing,” he asserts. He is optimistic about the markets if the Federal Reserve lowers interest rates, which he expects to drive bond appreciation and economic growth.
Regular Financial Review: DeLuca advises that financial plans should be regularly updated regardless of political changes. “Always look at your financial plan,” he says, emphasizing the importance of revisiting and adjusting plans every six months.
In summary, DeLuca suggests that while Harris's presidency could lead to notable policy changes, especially regarding taxes and estate planning, the most crucial aspect for retirees is to stay informed and regularly review their financial plans.