Throughout the last year and even in the previous month, many changes have happened economically and politically. You may be wondering how your retirement plans or financial health could be affected. Change is inevitable, but it can present opportunities as well. Let’s take a look at some historical statistics that might ease your worries as well as potential tax changes.
POLITICS AND THE MARKET
With all the political shifts occurring recently, data shows us that when one political party has control over the White House, the Senate, and the House of Representatives, it has a positive impact on the S&P 500. In fact, over the last 60 years, the S&P 500 gained +11.8% per year when one party was in control.
Additionally, if you look at the performance of the S&P over the last 50 years, it has been up for 40 of those years, gaining +10.9% per year. Of those positive 40 years, the index had an average annual gain of +18.4% and lost an average of 14.8% per year during the ten down years.
TAX CHANGES AND INTEREST RATES
The new administration could expand the housing opportunity. President Biden is proposing up to a $15,000 tax credit for new homebuyers to use as a down payment. For individuals who have not owned a home within the previous three years, using the tax credit would help offset the costs of home buying. This could help millions of individuals and families. However, if this tax credit goes into effect, we could see the prices of homes skyrocket. Prices are climbing higher already. If there aren’t enough homes for sale to meet demand, increasing the number of buyers with a tax incentive might result in faster price growth.
However, a favorable housing statistic showed the average nationwide interest rate for a 30-year fixed-rate mortgage reached an all-time record low national average at 2.66% set in late December 2020.
PAYING FOR THE PANDEMIC
With new rounds of stimulus payments proposed, you might question how our country will pay for everything. Will there be a tax increase to combat the most expensive year in history? It’s unlikely broad tax hikes will be implemented until the economy returns to a state considered “normal.”
HOW DOES YOUR FINANCIAL SITUATION STACK UP?
Time to take a closer look at your financial situation. Retirement may be closer than you think! Let’s get your retirement on the right track. You can schedule an appointment today with Benchmark Financial Group by filling out the form online or calling David Raetz at 913-534-8256 to discuss your financial needs.
“Jackson National Life: By The Numbers.” https://www.jackson.com/. 5 Jan. 2021.
