How presidential elections can impact your retirement plan

Election years can introduce new uncertainty and stress for everyone saving for retirement, but that shouldn’t affect how you stick to your savings strategy. Now is a good time to learn about how staying the course is essential and accessing smart resources can help.

Given that presidential elections affect everything from foreign policies to local politics, it’s no wonder they can also impact your retirement plan. According to a recent Voya survey:

• 35% of working Americans say they are delaying decisions about saving for retirement until after the 2024 presidential and congressional elections.¹
• 42% of working Americans believe that the pending elections will have a severe or major impact on their ability to save for retirement.¹

However, both short- and long-term election effects tend to be negligible. The election news cycle and outcome can cause volatility in the financial markets, though that’s typically short-lived.² And potentially, presidential elections can impact retirement plans beyond portfolio investment performance. A new administration may push for economic or tax policy changes. The regulatory environment and investor sentiment can also shift, altering people’s retirement savings plans and goals.

But for you, it’s important to not react to election news rather, it’s a better idea to maintain your retirement savings and investment strategy and avoid rash decisions. At Voya, you have access to education and tools to help navigate uncertainty and stay the course, so delays won’t cost you time and investing opportunities. 

The election effect

Presidential elections can impact your retirement plans in multiple ways, including the following: 

1. Increased market volatility — in the short term

Campaign news and political uncertainty can play out in the financial markets, especially during a big election year. Although when you look at the entire presidential election year, average annual returns of the S&P 500 from 1937 through 2022 were 9.9%² showing that over the long term, the election effect on markets is limited. In fact, research shows that economic factors and inflation are more apt to affect long-term investor returns than elections.³ This is why financial professionals recommend investors like you take election news in stride and focus on your long-term retirement strategy.

2. Changes in policies

Elections and their outcomes have more potential to affect retirement plans via changes in the administration and Congress. Those shifts can lead to new policies affecting debt, savings, investments, and more. For example, Congress approved the SECURE 2.0 legislation in 2022, which increased the required minimum distribution (RMD) age for retirement plans from 72 to 73. It’s one of several beneficial changes to RMD rules. The new law also allows employers to help employees with student debt via employer matches.⁴ That not only helps you pay down your student loans faster but also frees up money you can use for your retirement savings. Ask your employer if they offer this benefit. 

3. Regulatory shifts

Elections bring new administrative leaders, who, of course, have their own legislative initiatives and aims. Changes in the regulatory environment can affect how retirement plans are managed and administered and impact investments, savings, and other financial issues. For example, some financial professionals predict the outcome of the pending election could yield regulatory discussions and possible changes regarding employer mandates for retirement plans, the age employees can access such plans, and various tax advantages set to expire in 2025.⁵

4. Investor sentiments

Lastly, presidential elections can influence investor sentiment and consumer confidence in the economy. Politically influenced outlooks may affect your investment decisions. For example, retirement savers like you may react to an election by changing your portfolio allocation, reducing contributions, or shifting your risk tolerance. The outcome of an election may make you more or less optimistic about the future, depending on your political affiliation. And since retirement saving is often decades-long, it’s essential you stay the course with an eye toward the long-term. 

Here are some ways you can get the support you need:

• Access educational resources: Start by educating yourself about how best to navigate market volatility by visiting the Navigating Market Volatility learning hub to increase your overall financial literacy. Know that near-term volatility doesn’t warrant dramatic changes to investment strategies and there are benefits to staying the course. You can also visit Voya Learn to attend live or on-demand webinars. Lastly, consider consulting with a financial professional who can address any concerns you may have about how this election year may affect your retirement. 
• Enjoy various planning tools: Be sure to prepare yourself by using the many educational resources and calculators available to you and be sure you evaluate and assess your savings progress and retirement readiness. For example, Voya’s account dashboard allows you to set goals, track your progress, and learn more about effective saving, retirement, and benefits strategies.
• Take advantage of tax-advantaged savings guidance: Ask your employer about your workplace benefits and accounts that leverage tax advantages to accelerate retirement and other savings (e.g., health savings accounts, flexible spending accounts, etc.). These benefits may help your overall financial wellness and can help alleviate election-related anxiety. 
• Learn about diversification strategies: It’s a good idea to learn about the importance of portfolio diversification during economic or political volatile periods. Diversification strategies can help you align your retirement savings goals and risk tolerances.
• Ask about advisory benefits: Your employer may offer financial advisory services to you as a benefit, just ask. If so, this can give you access to a financial professional who can provide personalized financial guidance to help put you on the path to meet your retirement savings goals.

Election years introduce new and, sometimes, heightened stress for every American. But that stress doesn’t have to affect your retirement savings strategy. When you understand how elections affect — and don’t affect — your retirement plan, it can help reduce anxiety and improve financial wellness for you and everyone who is saving for retirement. 

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