Mattson Financial Blog
As I write this, I do not yet know who won the election. Our country may be in turmoil as the votes are counted — or we may know exactly who is going to live at 1600 Pennsylvania Avenue for the next four years.
The important thing to understand is that it doesn’t really matter who takes office when it comes to your taxes. New tax rates are coming, no matter what, due to the relief package doled out earlier in 2020. Someone has to pay for it, just as someone has to pay for the continued rising debt of the United States.
Now is the time to look at one of two possible courses of action you can take to take advantage of current tax laws.
As we’ve talked about in our webinars and in this newsletter, this year is going to be very important to set up income from sources with no taxable basis, such as Roth IRAs. As the election gets sorted out, and if Biden moves into the White House, he’ll move quickly to raise taxes and repeal the Trump tax cuts.
Of course, this is all in the short term. When it comes to investing for retirement, we don’t look at just one year, three years, or even 10 years. We look at investing for retirement as a long-term commitment and make decisions accordingly.
Right now, we’re considering the impact baby boomers will have on the economy in the coming years. In nine years, all the baby boomers will be 65 or older. This means most of the contributions made to their 401(k)s will be done.
However, as we look to the future, we know that there are more millennials than baby boomers. As millennials age, pay off their mortgages, finish assisting their children with college educations, and invest in the economy, they will be stepping into the role baby boomers have today.
Couple this with baby boomer retirement spending and you are left with the long-term effect of a growing economy, a growing stock marketing, and expanding employment. Many of the pieces are falling into place right now for a strong future.
So, sit back, relax, and enjoy the ride. We’ll see where the next president takes us and how the tax code changes. Hopefully, it changes for the benefit of us all.
If you are thinking of taking advantage of anything like gifting to charity or converting an IRA to a Roth IRA, be sure to seek out the wisdom of a financial advisor who is a fiduciary and who works with a CPA or certified tax professional.
In closing, I get to say something I never thought I would say this year: Go, MSU Spartans!