What the Election Could Mean For Your Retirement

February 5, 2024

As individuals approach retirement, safeguarding their retirement income from potential volatility becomes a paramount objective. With the looming specter of an election cycle, many are understandably concerned about its potential impact on their financial future. If you find yourself pondering the same, let’s delve into proactive measures you can take in preparation.

A primary area of apprehension for many is the potential influence of an election on the stock market, given that a significant portion of current and future retirees rely on it for their retirement accounts, such as 401(k)s or IRAs. The market’s strength is a key priority for an incumbent president, as it bolsters their leadership credentials. Historically, the S&P 500 has encountered negative returns in only four out of the past 23 election years since 1928. Despite this, post-election cycles have often witnessed market declines. According to Marshall Nickles of Pepperdine University, investors typically anticipate favorable business conditions, improved corporate bottom lines, and higher stock prices leading up to a presidential election, followed by a less robust period thereafter.

Reflecting on the 2016 election, those who harbored concerns and withdrew a portion of their investments might have missed out on the subsequent market upswing. Similarly, individuals who moved to cash during the 2008 crash and remained on the sidelines have regretfully missed potential gains. While it’s not a prophecy of doom and gloom, recent years may offer more relevant insights into the future than the preceding five decades.

Crucially, the stock market operates independently, defying precise predictions of its behavior. Past performance does not guarantee future outcomes. As we navigate an unprecedented election year, characterized by some as potentially resembling a circus, it’s imperative to prepare for any scenario. Establishing protective measures and ensuring your money is strategically positioned to capitalize on favorable times is crucial. Now is not the time to retract from the hard-earned financial foundation you’ve diligently built.

While there is optimism about potential market developments in the coming year, it is essential to remain prepared for uncertainties. The comforting news is that you are not navigating this journey alone. Collaborating with a financial professional can provide valuable insights into market dynamics and their personalized impact. Resist the temptation to be swayed solely by statistics and predictions that might dissuade you from market participation. Stay committed to your financial path and remember that, ultimately, you wield control over your financial destiny.

  1. https://www.thebalance.com/presidential-elections-and-stock-market-returns-2388526  
  2. 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 claims–paying ability of the insurer.