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7 steps to take if you think Biden will be re-elected

7 steps to take if you think Biden will be re-elected
7 steps to take if you think Biden will be re-elected

Light drops / Shutterstock.com

Light drops / Shutterstock.com

Winning a second term can prompt presidents to make policy changes. President Biden could be up for re-election in November, so now is the time to make sure your retirement plan is prepared for potential changes.

Election years are an important reminder that you should pay close attention to your retirement planning. If you haven’t looked into it in a while – or admittedly don’t have any – now is the time to take care of this important matter.

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It’s not always easy to know where to start, so GOBankingRates talked to the experts for you. Here’s a look at seven retirement planning steps to consider if you think Biden will be elected for another four years.

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Diversify your investment portfolio

“Diversification is a fundamental strategy for mitigating risk in your fixed income portfolio,” said Spencer T. Hakimian, founder of Tolou Capital Management. “Given the possibility of a continuation of economic policies under a Biden administration that could include increased government spending and regulatory changes, diversifying your investments can help protect against market volatility.”

He recommends dividing your assets so that they include a mix of stocks, bonds, real estate and other asset classes.

“Diversify further within these categories by investing in different sectors, industries and geographic regions,” he said. “This way, you reduce the impact of individual market events or political changes on your overall portfolio.”

Review and adjust your tax strategy

“Tax policy can significantly impact your retirement savings, and potential changes to tax laws if Biden is re-elected could impact income and capital gains taxes,” Hakimian said. “It’s important to discuss your tax strategy with a financial advisor to optimize your retirement plan.”

This may require a redistribution of your assets.

“Consider tax-advantaged accounts such as Roth IRAs, which offer tax-free growth and tax-free withdrawals, and traditional IRAs or 401(k)s, which offer tax-free growth,” he said. “Also explore tax-efficient withdrawal strategies, such as taking withdrawals from taxable accounts first to let tax-advantaged accounts grow.”

Through proactive tax planning, you can secure your retirement income.

Strengthen your health plan

Health care costs are a major concern in retirement, and policy changes under the Biden administration could impact Medicare and other related expenses, Hakimian said.

“Make sure you have a solid health insurance plan by looking into supplemental Medicare plans or long-term care insurance to fill any potential gaps,” he said. “Also, think about setting up a health savings account (HSA) if you’re eligible, as it offers triple tax benefits – tax-deductible contributions, tax-free growth and tax-free withdrawals for qualified medical expenses.”

A well-prepared health strategy protects your retirement savings from unexpected medical costs and gives you security.

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Your contributions to the pension plan

“Biden has proposed raising taxes on top earners, so there may now be more tax benefits to contributing as much as possible to tax-advantaged plans like 401(k)s, IRAs and HSAs,” said Nischay Rawal, CPA, managing partner at NR Tax and Consulting.

Since tax rates are still low, now is the time to take action.

Consider Roth IRA Conversions

You may have been thinking about it for some time, but now might be the right time to roll over assets from a 401(k), traditional IRA or 403(b) into a Roth IRA.

“If tax rates increase in the future, Roth IRA conversions made now could save you money because you’ll pay taxes at today’s lower rates,” Rawal said. “The converted amount can then grow tax-free over the life of the Roth IRA.”

Consider increasing your investment risk

“If the Fed keeps interest rates low, conservative investments like deposits and bonds may not keep pace with inflation,” Rawal said. “More investment in the stock market could bring higher returns, even with increased volatility.”

If you are a younger investor, he says, you have time on your side to weather the ups and downs of the market.

Review your estate planning

“Biden wants to eliminate the ‘step-up basis’ for inherited wealth and cap the estate tax exemption,” Rawal said. “Meeting with an estate planning attorney now to review and potentially update your will, trusts and beneficiary designations can help maximize your inheritance and minimize taxes for your heirs.”

This will give you greater peace of mind knowing that your loved ones will receive as much of your assets as possible.

“These are some prudent financial moves to consider if you believe Biden’s policies on taxes, spending and regulation could be implemented in a second term,” Rawal said. “Of course, you can’t know exactly what might happen, so the best approach is to create a comprehensive long-term fiscal plan and then make adjustments accordingly.”

He said the key to creating successful long-term financial planning is to save enough money, maintain a balanced portfolio and be prepared for potential changes in tax laws.

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This article originally appeared on GOBankingRates.com: I’m a Retirement Planner: 7 Steps to Take If You Think Biden Will Be Re-elected

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