Yahoo Finance I’m a Retirement Planner: 7 Moves You Should Make If You Think Biden Will Be Reelected
Winning a second term can prompt presidents to make policy changes. President Biden might be reelected in November, so now is the time to ensure your retirement plan is ready for any potential shifts.
Election years are a major reminder to pay close attention to your retirement plan. If you haven’t revisited in a while — or admittedly don’t have one — now is the time to get on top of this key matter.
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Knowing where to start isn’t always easy, so GOBankingRates spoke with the experts for you. Here’s a look at seven retirement planning moves you should consider if you think Biden’s elected to serve another four years.
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Diversify Your Investment Portfolio
“Diversification is a fundamental strategy to mitigate risk in your retirement portfolio,” said Spencer T. Hakimian, founder of Tolou Capital Management. “With the potential for continued economic policies under a Biden administration, which may include increased fiscal spending and regulatory changes, diversifying your investments can help protect against market volatility.”
He recommended allocating your assets to include a mix of stocks, bonds, real estate and other asset classes.
“Within these categories, diversify further by investing in different sectors, industries and geographic regions,” he said. “This way, you reduce the impact of any single market event or policy change on your overall portfolio.”
Review and Adjust Your Tax Strategy
“Tax policies can significantly affect your retirement savings, and potential changes in tax laws under a Biden reelection could impact income and capital gains taxes,” Hakimian said. “It’s crucial to review your tax strategy with a financial advisor to optimize your retirement plan.”
This might mean you need to reallocate your assets.
“Consider tax-advantaged accounts such as Roth IRAs, which offer tax-free growth and withdrawals, and traditional IRAs or 401(k)s, which provide tax-deferred growth,” he said. “Also, explore tax-efficient withdrawal strategies, such as withdrawing from taxable accounts first to allow tax-advantaged accounts to grow.”
Taking a proactive approach to tax planning helps preserve your retirement income.
Strengthen Your Healthcare Plan
Healthcare costs are a major concern in retirement, and policy changes under the Biden administration could impact Medicare and other related expenses, Hakimian said.
“Ensure you have a robust healthcare plan by exploring supplemental Medicare plans or long-term care insurance to cover potential gaps,” he said. “Additionally, consider setting up a health savings account (HSA) if you’re eligible, as it provides triple tax benefits — tax-deductible contributions, tax-free growth and tax-free withdrawals for qualified medical expenses.”
A well-prepared healthcare strategy safeguards your retirement savings from unexpected medical costs and provides peace of mind.
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Out Your Retirement Plan Contributions
“Biden has proposed raising taxes on high earners, so contributing as much as possible now to tax-advantaged plans like 401(k)s, IRAs and HSAs can provide more tax benefits,” said Nischay Rawal, CPA, managing partner at NR Tax and Consulting.
Since tax rates are still low, he said now is the time to take action.
Consider Roth IRA Conversions
Maybe you’ve been thinking about it for a while, but now could be the time to move assets from a 401(k), traditional IRA or 403(b) into a Roth IRA.
“If tax rates increase in the future, Roth IRA conversions completed now could save you money since you’ll pay taxes at today’s lower rates,” Rawal said. “The converted amount can then grow tax-free for the life of the Roth IRA.”
Think About Increasing Your Investment Risk
“If the Fed keeps rates low, conservative investments like CDs and bonds may not keep up with inflation,” Rawal said. “Investing more in the stock market could provide higher returns, even with increased volatility.”
If you’re a younger investor, he said time is on your side to ride out market ups and downs.
Review Your Estate Plan
“Biden wants to eliminate the ‘step-up in basis’ for inherited assets and cap the estate tax exemption amount,” Rawal said. “Meeting with an estate planning attorney now to review and possibly update your will, trusts and beneficiary designations can help maximize your legacy and minimize taxes for your heirs.”
This can allow you to enjoy a greater peace of mind, knowing your loved ones will receive as much of your assets as possible.
“Those are a few prudent financial moves to consider if you expect Biden’s policies around taxes, spending and regulation may be enacted in a second term,” Rawal said. “Of course, there’s no way to know exactly what may come to pass, so the best approach is creating a comprehensive long-term financial plan, then adjusting accordingly.”
He said the keys to creating a successful long-term financial plan include saving enough money, keeping a balanced portfolio and being prepared for potential tax law changes.
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This article originally appeared on GOBankingRates.com: I’m a Retirement Planner: 7 Moves You Should Make If You Think Biden Will Be Reelected
