Survey Finds Nearly Half of Investors Think 2024 Elections Will Impact Portfolios More Than Market Performance

May 23, 2024

For many Americans, planning for retirement can seem like an overwhelming financial challenge. Now, the 2024 elections add another layer of concern.

A survey by Nationwide Retirement Institute reveals that nearly half of investors (45%) believe next year’s presidential and congressional elections will impact their retirement plans and portfolios more significantly than market performance. Among Republican investors, 68% think the election outcome will directly and lastingly affect the stock market, compared to 57% of Democratic investors. The survey, conducted online in August, included 2,404 investors aged 18 and older, as well as 507 financial advisors and other professionals.

The survey also indicates that many respondents are worried about the economy’s future, with 32% believing a recession is likely if the opposing party wins. Older investors, particularly those aged 55 to 65 nearing retirement, are most apprehensive about the potential long-term effects of a recession and inflation. In anticipation of the 2024 election, 33% of pre-retirees are managing their investments more conservatively, compared to 31% of non-retirees.

Eric Henderson, president of Nationwide Annuity, noted that people often overestimate the elections’ impact on equity markets. He emphasized that retirement planning requires a long-term perspective, and historically, presidential elections have not significantly influenced equity markets over the long term.

The 2024 election is also expected to influence Social Security, which currently replaces about 40% of Americans’ pre-retirement income. The Social Security trust funds are projected to be depleted by 2034, potentially reducing benefits to 80%. The leaders elected next year will play a crucial role in deciding any adjustments needed before that date. Former President Donald Trump, leading in Republican polls, has promised to protect entitlements like Social Security and Medicare. Florida Governor Ron DeSantis, second in GOP primary polls, reiterated his commitment to maintaining benefits for current seniors. However, future beneficiaries might face changes, as GOP candidates are divided on raising the retirement age, with some, like former New Jersey Governor Chris Christie, suggesting the wealthy should forgo unnecessary benefits.

Nationwide’s survey found that financial advisors are also concerned about the election’s potential market consequences. While 46% of advisors see inflation as the biggest challenge to retirement portfolios, 38% anticipate market volatility for a year post-election if their opposing party wins. Despite this, 56% of advisors recommend sticking to a long-term investment strategy during election years, and 96% are implementing measures to shield clients from market risks. These strategies include purchasing annuities, diversifying into non-correlated assets, and focusing on more liquid investments like mutual funds and ETFs.

Henderson advises that a solid financial plan is crucial, and maintaining it is often the best approach. For those without a plan, consulting a financial advisor is a good step. Preston Cherry, a certified financial planner and president of Concurrent Financial Planning, emphasizes that investment returns generally average out, irrespective of the ruling party. He advises individuals not to let the election noise overly influence their emotions and decisions, and to focus on relevant information for their households.

Despite uncertainties surrounding Social Security, experts still recommend that retirees delay claiming benefits if possible.

For more information on how the upcoming election may effect your retirement, contact the Patria Wealth Group at 302-595-9339 to schedule your no cost, no obligation consultation.