Financial essentials
The 2024 election & your retirement plan account
Read time: 4 minutes
There’s nothing quite like a presidential election to get the political passions of millions of Americans flowing.
2024 is no different — in fact, this year and election has been unprecedented in many ways. But, when November 5th comes and goes, one place where you shouldn’t react is your retirement plan — no matter the outcome. That’s because rash decisions, made in the moment, can have long-term negative consequences on your retirement account.
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Three things you need to know this election season when it comes to your retirement:
It’s generally wise to stay the course.
While there is a widespread sense that financial markets are volatile during election years, when we look at the history, we see something very different.In fact, looking back at presidential election year returns from 1928 through 2020, we see remarkable consistency when it comes to returns*:
U.S. elections year stock returns have historically been strong
S&P 500 Index, average 6 & 12-month returns(%)
Data source: Bloomberg, L.P., presidential election year returns from 1928 to 2020.
Performance data shown represents past performance and does not predict or guarantee future results. Data reflect the S&P 500 total return.
In the heat of an election season, everything can feel very unsettled and volatile. These feelings, along with any associated market volatility, tend to dissipate over time after the election is resolved.
Divided government can help temper policies & force compromise.
While no one can predict the future, many prognosticators believe that the most likely outcome of the 2024 election season will be some form of divided government. This may be frustrating for those who want to see big, sweeping legislative changes enacted, but a divided government (where each party controls at least one of the House of Representatives, the Senate, and the Presidency) can have a tempering and cooling effect that will force more compromise and consensus building to help get legislation passed. This can be a good thing for the economy and your retirement plan account, as big spending and taxation policy changes enacted by one-party rule can have a negative effect on the economy. Among other impacts, big changes can lead to ballooning deficits, fluctuations in the workforce and increased inflation.
Expect changes to taxation in some form (no matter who wins).
2025 is shaping up to be a big year when it comes to everyone's favorite subject: tax policy. Most of the provisions of the 2017 Tax Cuts and Jobs Act (TCJA) are set to expire. This means, that unless the new Congress takes action, the following will happen automatically:
- Marginal tax rates will revert back to their pre-2017 levels, meaning that millions of Americans will potentially pay a higher rate.
- Standard deductions will decrease significantly, resulting in more filers taking itemized deductions.
- The alternative minimum tax (AMT) threshold would decrease.
- The $10,000 state and local tax (SALT) deduction cap would be lifted, allowing those that pay more than $10,000 in state and local taxes to deduct the full amount.
And these changes don’t represent the full scope of potential tax policy changes that have been discussed. So far this election season there have been discussions around eliminating taxation on gratuities and overtime pay. Plus, potential changes to the tax incentives associated with retirement savings have been part of the overall discussions around how to handle the United States federal deficit levels.
How might tax policy change?
More Democratic control
- Rollback/allow portions of TCJA to expire
- Expand the Child tax credit
- Increase corporate taxes
Divided government
- Extend TCJA middle class tax cut
- Promote domestic research and manufacturing
- Increase taxes on unsympathetic groups
More Republican control
- Make permanent/extend TCJA provisions
- Scale back IRS enforcement
- Expand business deductions while maintaining rates
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*”2024 elections: policy shifts and portfolio construction views.” Nuveen Global Investment Committe. Found at:
This material is for informational or educational purposes only and is not fiduciary investment advice, or a securities, investment strategy, or insurance product recommendation. This material does not consider an individual’s own objectives or circumstances which should be the basis of any investment decision.