A new year brings with it the opportunity to start fresh. After 2020, a tumultuous year that has felt more like four, many are looking forward to a reset. This opportunity can be choosing to change undesired habits, to start anew, or to reevaluate what’s to come. Many chose to change their spending habits or try out a healthier lifestyle. This coming year, more than in past years presents a unique opportunity for Americans. The year 2020 was a year unlike any other; a global pandemic that changed the world, an uncertain and unstable economy, a historic presidential election—life is much different than it used to be.
January of 2021, Joe Biden will take office, and with a new president comes new policies. It’s important to note that in 2021, as society attempts to navigate and recover from 2020, being proactive and taking steps to protect yourself will be important. Since the government will be focusing its efforts on recovery, millions of Americans who fail to act quickly will likely fall through the cracks.
Here are some of the policies the Biden administration plans for 2021 that affect retirement:
- Instead of reducing taxable income, a proposed refundable tax credit that analysts say would be equal to 26% of the amount contributed. This is described as a matching contribution because it would be deposited into the individual’s retirement account.
- The result would be a tax reduction for low and moderate-income taxpayers and a tax increase for those in the higher tax brackets. It hopes to encourage lower-income individuals to save more for retirement.
- Expanded Social Security benefits: minimum benefit will be at least 125% federal poverty level and increasing minimum benefit for those that have spent 30 or more years working.
- Raise social security’s minimum benefit
- Increase the benefit for older Americans
- Enhanced benefits for some beneficiaries
- Growing national debt, additional stimulus checks, and extra funding that will require more quantitative easing and may contribute to the devaluation of the dollar.
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The Penn Wharton Analysis found that:
“In total, including macroeconomic and health effects, the Biden platform increases federal debt by 0.1 percent in 2030 before decreasing debt by 1.9 percent in 2040 and 6.1 percent in 2050; GDP decreases by 0.4 percent in 2030, sees no change in 2040, and increases by 0.8 percent in 2050.”
If you would like to learn more about how the new presidency will affect your retirement accounts, you can download our FREE report.
So what does this mean for your retirement?
The coronavirus forced people into lockdowns and degraded world economies. Biden has promised policies that will require more spending and stimulus. In order to do this, the government will have to print more money than they already have, which ultimately devalues our currency and will continue to debase the U.S. dollar. As seen in 2008, those who were heavily invested in the stock market lost almost half of their retirement savings. Retirement diversification is the number one rule in investing to ensure you are protected in times of market uncertainty, similar to the volatility of markets now and in the future. By having a portion of your wealth invested in an asset that moves in the opposite direction of the stock market, it protects you and your life savings from being crushed.
Precious metals have historically served as a protective hedge against inflation and will continue to do so as our economy experiences unprecedented circumstances. In addition to this, Biden’s environmental plan emphasizes investment in tech and electric vehicle companies such as Tesla. Electric vehicles use two types of precious metals, gold, and silver. As production with these materials goes up, so does demand, as well as the prices. During uncertain times, precious metals are starting to look more and more like the safety net we need, but it is important for individuals to invest before prices get too high.
What steps can you take to protect your financial future this year?
As mentioned, retirement diversification is the most important rule when it comes to investing. In order to do this, you must select an asset that serves as a protective hedge against inflation such as precious metals. If you would like to learn more about a gold retirement account, how a gold IRA works, and the benefits of a gold IRA, you can read our extensive report here. This report covers questions about what a gold IRA is, how a gold IRA plan works, self-directed gold IRA custodians, and the benefits of a gold IRA.
To learn more about the best ways to secure your retirement savings, contact an Allegiance Gold Account Executive today!