How the presidential election will impact your wallet

Social Security and taxes are big topics ahead of the election.
Updated: Oct. 27, 2020 at 6:30 PM EDT
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LOUISVILLE, Ky. (WAVE) - The race for the White House is entering the final stretch.

People are casting their ballots and there are different factors motivating folks about who they are voting for. One big question many people have is, “What would a win for Donald Trump or Joe Biden mean for my wallet?”

Financial expert Tim Riney from the Family Wealth Group says no one can predict what will happen, but how the stock market performs after the election can be gauged with how it has performed in previous election years.

Riney says the stock market ebbs and flows with a four-year election cycle. Historically, market performance is worse in the first half of a president’s term compared to the second half.

“Studies show the Dow has gone up 9% annually when Democrats are in control and increased 6% annually during Republican administrations,” Riney said. “From an investment standpoint, it’s not enough to make a drastic difference long term.”

Riney says elections should not drive investment decisions. As far as the central money issues that will be impacted, taxes are big.

“The Tax Cuts and Jobs Act is President Trump’s signature policy,” Riney said. “It made big changes to the estate and income taxes, aiming to put more money back in Americans' pockets.”

Trump has suggested implementing other policies if he is elected for a second term, like a “Made in America” tax credit, but Riney says the precise details are still unclear.

Biden’s tax plan is starkly different.

“Joe Biden has said he wants to raise taxes for those making more than $400,000 a year, which will fund a host of new initiatives,” Riney said.

Social Security is another big topic ahead of the election.

President Trump’s executive order deferring payroll taxes until 2021 went into effect on Sept. 1 as part of his coronavirus economic relief efforts.

“The big concern is this has the potential to impact Social Security, which is nearly 90% funded by payroll taxes,” Riney said.

Riney said Biden wants to increase Social Security benefits for Americans and plans to fund it through higher payroll taxes for the wealthy.

As far as the federal minimum wage, the current rate is $7.25, and Biden is proposing to raise it to $15. According to Wallethub, Trump is suggesting no change, and leaving the decision up to the states.

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