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What the Election Could Mean For Your Retirement

For those soon approaching retirement, the main goal is to protect your retirement income from potential volatility. It’s no surprise that many people wonder how approaching an election cycle could impact their financial future. If you’ve wondered the same thing, let’s explore what you can do to prepare. 

For many, the biggest area of concern is usually how the stock market could be affected, because many current and future retirees depend on the market for much of their retirement accounts such as a 401(k) or IRA. Having a strong market is a top priority for an incumbent president because it makes a strong case for them as a leader. In fact, the S&P 500 has only experienced negative returns in four out of the past 23 election years since 1928.1  However, the periods just after an election cycle have often resulted in decline for the market. According to Marshall Nickles of Pepperdine University, “… investors have come to assume better times for business conditions, corporate bottom lines, and stock prices in the period prior to a presidential election and a less robust period following those periods.”2 

If you were worried before the election in 2016 and pulled a portion of your money, you may have lost out on the market increase we experienced after the election. We’ve meet many people who moved to cash during the crash of 2008 and stayed out of the market and they’ve really missed the boat. They associate the crash with the election and worry every time we approach an election year. We’re not predicting doom and gloom around the corner, but our more recent years are going to be more indicative of the future than the last 50 years. 

It’s important to remember that the stock market has a mind of its own and there’s no way to accurately predict what it will do. Past results do not guarantee future performance. Going into this unprecedented election year that some people would say may be a circus, we’ve got to be prepared for any circumstance. You’ve got to have protection built in and have your money in a place where it can earn for you and take advantage of the good times. Now is not the time to pull back on what you’ve worked hard to build. 

We are personally optimistic about what we may see next year in the markets, but we’ve got to be prepared for whatever may come. The good news is that you’re not alone. Working with a financial professional can help you make sense of what’s going on in the market and how it can affect you personally. Don’t let statistics and predictions negatively keep you out of the market. Stay on course and remember that you are ultimately in control of your financial future.  

  1. https://www.thebalance.com/presidential-elections-and-stock-market-returns-2388526  
  1. https://gbr.pepperdine.edu/2010/08/presidential-elections-and-stock-market-cycles/ 

*References to “protection” generally refer to the use of insurance and annuity products/services that are market risk averse. Insurance and annuity product guarantees are subject to the claimspaying ability of the insurer. 

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