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The latest polls show the two presidential candidates, Donald Trump and Kamala Harris, within a few points of each other, and the November election could easily swing in either direction. .
Yes, you must exercise your right to vote. And feel free to enjoy thoughtful and friendly discussions with friends and family who think differently about politics. But don’t forget to prepare financially for an unpredictable future.
Read next: I’m an economist: Here are my predictions for Social Security if Kamala Harris wins the election
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In other words, no one knows exactly what will happen, so start saving now. Here are six reasons to save money ahead of the election, no matter who you think will win.
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Buffer against uncertainty
“Economic uncertainty often increases after an election,” said Doug Carey, CFA, founder of Wealthrace. “Regardless of how the next president’s policies affect the economy and financial markets, you can create a financial buffer by increasing your savings now.”
We can’t rely on favorable policies or a strong economy, but we can put ourselves in a strong position to weather whatever storms come our way.
Learn more: I’m an economist: Here are my predictions for Social Security if Trump wins the 2024 election
Budget for tax hike
Amy Lofts-Gordon, a lawyer and editor of Nolo magazine, said major tax changes are planned for the end of next year.
“Many provisions of the Tax Cuts and Jobs Act of 2017, including increasing the standard deduction and lowering income tax brackets, are scheduled to expire at the end of 2025,” he said. “While it may seem like a long way off, now is a good time to start saving more in case you need to pay more in taxes and preparing for possible changes to the tax code.”
Whichever candidate wins, Congress will need to take action to change the sunset tax system. Some rules may expire one way or the other, other common changes may be extended one way or the other, and some new rules may be added. there is. Prepare now for tax changes.
persistently high inflation
The US economy has not yet emerged from the inflationary forest. Indeed, while some experts say it will take years to recover from inflation if Trump wins, many expect inflation to persist for a long time under a Harris administration.
“Although inflation is no longer at a 40-year high, the cost of almost everything from groceries to borrowing is still rising,” Lofts-Gordon said.
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Picking policy proposals from either candidate, you can argue that they are all potentially inflationary, from higher tariffs and government spending to expanded subsidies and tax credits.
“When inflation and interest rates are high, it makes sense to put money into savings and pay down existing debt instead of spending what you have available,” she added.
Prepare for streamlining of social security benefits
Calculations regarding Social Security spending are not very accurate. Solving this problem would require either significant benefit cuts or tax increases, both of which are unpopular, to say the least. So it seems unlikely that either party will be able to tackle the issue, and the House Budget Committee projects that Social Security will be insolvent by 2033 if nothing is fixed.
Therefore, you cannot rely on the same Social Security benefit levels that past retirees have enjoyed. Set up your own retirement savings so you don’t end up broke in your golden years.
You control your finances, not the president.
People like to blame the president and other politicians for every hardship in life. But you are ultimately responsible for your personal finances, not the person sitting in the Oval Office.
You control your career choices, savings rates, and investment decisions. Focus your energy on what you can control. Your future self will thank you for having more options available to you because you’re saving and investing more money now.
power of compound interest
In general, saving and investing early can lead to exponentially greater wealth. Imagine you wait until you’re in your 50s and want to save $1 million over the next 10 years for retirement. To earn a (significant) 10% return, you would need to invest close to $5,000 each month.
If you started just five years ago and your investments have 15 years to compound, you could invest less than half (less than $2,500) each month to reach your $1 million goal. And if it takes you 20 years, you can reach $1 million by investing about $1,330 every month. This is all thanks to the power of compound interest.
So get started now. That way, by the time the next president leaves office, we will find ourselves in a much better position financially.
Editor’s Note on Election Coverage: GOBankingRates is nonpartisan and strives to objectively cover all aspects of the economy and provide balanced reporting on politically focused financial stories. More information on this topic can be found at GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: 6 reasons why it’s important to save money ahead of the election, regardless of whether Trump or Harris wins
