Taxes and Benefits


Whenever a presidential election comes around, Americans can expect to hear more about the campaign trail and less about upcoming bills and legislations. There is no exception with the 2020 election looming on the horizon. As of July 1st, the largely Democratic House of Representatives had passed 169 bills in 2019, while the Republican-majority Senate had passed 61. It’s due to this unfortunate impasse that only 24 bills have been produced and enacted since the January 1st start to the Congressional session.

While this gridlock in legislation might make some nervous to invest, the market tends to prefer this climate, lending credence to the concept that “no news is good news on Wall Street”. During periods in which Congress has slowed down forward motion on legislation, there are two useful strategies the average investor may wish to employ. Begin with analyzing your portfolio to guarantee it’s on track. It may be prudent to revise or rebalance during periods of low volatility.

Then, if your assessment supports that your current asset mix aligns with your financial objectives, consider letting a sleeping bear lie. A positive aspect about a lack of legislative activity is that the markets mainly rely on investment fundamentals rather than high-risk fiscal changes — basically, enjoy a relatively calm market while you can. Being (somehow) halfway through 2019, we are here to help you conduct a midyear review and make recommendations as needed based on personal goals, market fluctuation, and investment timeline.

Economic conditions are positive overall for investors, but the rest of the country may be frustrated by inaction among legislators. The division of the aisle takes a toll even on legislation that could be considered bipartisan, such as the recent call to authorize future funding for the September 11th Victim Compensation Fund. The original funding set by Congress is nearing its end, but this didn’t account for the rise in claims filed in recent years related to cancer diagnoses and deaths of survivors. Payouts for new claims are being cut by up to 70 percent as the fund approaches its December 2020 expiration date.

Also approaching the end of is track is the Social Security fund, which is projected to run out of reserve funds by 2035. Without further funding, it is expected to pay out only 80 percent of the current level of benefits. A slew of solutions have been proposed, especially in the past few years, but this controversial legislation continues to stall. An additional tax on any income group can be equally as contentious as cutting benefits, so it’s unlikely the impending Social Security shortfall will be resolved during an election year, or even the year preceding it.

Considering all the possible changes to taxes, benefits, and legislation in the upcoming years is overwhelming. To ensure that you are on the right financial track, or if you need assistance securing investment nest eggs and a savings backup, speak with one of our financial planners in Willow Grove. We are available to help make the uncertain a bit more certain.

Financial Post. June 3, 2019. “Politics can drive markets – but not like most expect.” https://business.financialpost.com/sponsored/fisher-investments/politics-can-drive-markets-but-not-like-most-expect. Accessed August 15, 2019.

Shannon Van Sant. NPR. Feb. 16, 2019. “Sept. 11 Victim Compensation Fund Cuts Payouts By As Much As 70 Percent.” https://www.npr.org/2019/02/16/695481252/9-11-victims-compensation-fund-cuts-payouts-by-as-much-as-70-percent. Accessed August 15, 2019.

Lorie Konish. CNBC. June 11, 2019. “Turns out it’s not baby boomers who have taken the most from Social Security.” https://www.cnbc.com/2019/06/10/its-not-baby-boomers-who-have-taken-the-most-from-social-security.html. Accessed August 15, 2019.

 Social Security Administration. “Proposals to change Social Security.” https://www.ssa.gov/OACT/solvency/index.html. Accessed August 15, 2019.

Govtrak.us. “Advanced Search for Legislation.” https://www.govtrack.us/congress/bills/browse#current_status[]=4. Accessed August 15, 2019.

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