Mark Rowlette, founder and president of South Shore Retirement Services, along with co-host Damon La Tanzi, discuss how the 2024 election could affect various aspects of retirement. Rather than taking a political stance, the focus is on educating listeners on what to expect from both parties and how these changes might impact their financial planning.
Segment 1: Introduction to the Episode Topic
Segment 2: Importance of Planning for Both Scenarios**
Segment 3: Social Security and Medicare
Segment 4: Tax Implications
Segment 5: Economic Policies and the Stock Market
Segment 6: Real Estate Taxes and Local Government Funding**
Segment 7: Recap and Disclosure
Jordan Rich [00:00:03]:
Welcome. This is the retire South Shore Radio Podcast produced by South Shore Retirement Services, inviting you to get started on the path toward your dream retirement today. Here's the founder and president of South Shore Retirement Services, Mark Rowlette.
Mark Rowlette [00:00:22]:
From a political standpoint, you know, the country seems like it's quite divided on most, to say the least. Yeah. But looking at the, you know, the nuts and bolts or the facts and figures of things and how things might go, depending on what way the election goes, could be the difference between having an extra $500 in your pocket and not having an extra $500 in your pocket to having some benefit from one side and some benefit from the other and drawbacks in both ways as well. And, you know, I think I- People are looking at it much more closely these days. Maybe that's just because we're getting older ourselves, Damon, you and I, that we're paying much more attention to it. I know that my youngest daughter, Reese, is going to be paying a lot more attention to it because we were over last weekend at a wedding, which we'll chat about because I want to congratulate the new couple. But we got back up on Monday morning at like 3:30 in the morning because Reese needed 45 minutes to get pretty prepared for me to drop her to school because she's gone to her DC trip.
Damon La Tanzi [00:01:23]:
So she's been-
Mark Rowlette [00:01:24]:
She was in DC all last week learning about government. So we almost should have had her come in on the show to give us her two cent on things. But I don't know what direction it would have gone. And she didn't see any lululemons anywhere when she was over on her tour. But, yeah, you know, last week we talked a little bit about, you know, inheriting money and things that maybe you should be thinking about when that happens and things that maybe you should be taking a. Just a quick beat or a pause before you make an enormously large decision based on this newfound money. And I want to talk a little bit about, obviously, today about what maybe the impact would be on various things that are impactful to our clients, depending on which side ends up getting into the White House in the upcoming election. But like you said, Damon, most of the people that we work with, when we're talking to them, they just want to make sure that they're going to be okay and they're going to have enough money to do the stuff that they want to do.
Mark Rowlette [00:02:18]:
Listening to our show for the first time, or you've listened to the show for a number of weeks, months, if not years, and haven't made that first step. It really is a good opportunity to just ask questions and be like, this is my situation. How could a potential democratic presidency impact me? How could a potential republican presidency impact my bottom line? So the way to do that is to make the call. Call the office at 781-303-9904 that's 781-303-9904 and set up a 15 minutes introductory call with myself, Damon, or any of the advisors here in the office, and just get the ball rolling and see what, what maybe you could be thinking, considering, or even implementing to improve your own retirement for you and your family so you can enjoy the things that you really, you know, really are probably more important than the spreadsheets.
Damon La Tanzi [00:03:11]:
Today's topic is ways that the upcoming election could affect your retirement. And I think we're not going to be political in the standpoint of telling you who we hope wins. I think our job is to say, okay, if this happens, here are some possibilities. If this other thing happens, here are other possibilities. But in a lot of ways, Mark, we're in unchartered waters. Right? Former President Trump was recently found guilty on all counts in his trial, and that has implications. But, and if you filter through the noise of whatever's going on out there, yeah, there will be challenges, but there's always opportunities. There's always things you can do.
Damon La Tanzi [00:03:47]:
And when we're talking to our clients and trying to instill that sense of comfort in their minds, it's that, hey, we've built a plan. The plan might need to change, but a good plan can change. A good plan will change. It will be flexible enough. So I think the takeaway here, Mark, is whoever wins the election, yeah, there'll be challenges, but there'll also be opportunities. And our job is to help our clients navigate through, through trying to minimize the challenges, minimize the hurt, if you think of it like that, and maximize the opportunities. And Social Security and Medicare, of course, are two huge programs that are at the top of almost every retiree's mind.
Mark Rowlette [00:04:22]:
Yeah, I mean, obviously, I don't, neither of us know exactly what's going to happen depending on which side gets in, even depending on which side gets in, what they're actually going to do. But one party might advocate to increase the retirement age, right, to push it out where it's currently at 67, to say, let's push it out to 68, 69 or even 70. Right. And that would be your full retirement age benefit. Or they might look at changing up how cost of living adjustments are actually adjusted. Are they going to be this consistent increase every year on some fixed amount, or are they going to be tied into inflation? Because I know for sure over the last few years there was massive increases in the Social Security benefits, which was great because everything was costing so much more. But they tend never to go in the opposite direction either. Right.
Mark Rowlette [00:05:10]:
If things start to get less expensive and they don't level it out, they just kind of zero it out. And one party might kind of lean in on that one, and another party might end up saying, you know what? We're going to try and benefit more of the masses, try to really impact the fact that so many people in this country live on Social Security. Like it's their, it's their primary source of income in retirement, and it makes up a huge portion of their overall retirement income. And for people who aren't, you know, in that boat, people who maybe Social Security is 20 or 30% of their income, and it's not really something they're thinking about, it should be something that you think about because there's a lot of tax implications and tax strategies and benefits to timing of when you would take that, depending on what else you have going on in your world, right? I mean, you might have an IRA, you might have non IRA accounts that have high tax, high capital gains in them. And how you navigate through taking your Social Security could be the difference between having an extra $500 a month or having an extra $2,000 a month, depending on what you do.
Damon La Tanzi [00:06:12]:
The last big proposed change of Social Security came under the second Bush administration when they sort of made a quasi effort to talk about privatizing it and letting individuals control their accounts. And really politically that ended up going nowhere. So I think probably a good bet is whichever political party wins, I'm not expecting to see massive changes to Social Security, particularly around people who are already collecting benefits or are about to begin collecting benefits, really, because seniors and people 55 and older are a huge voting bloc, and it really wouldn't be that smart politically to propose a whole bunch of nasty cuts and changes to people that are likely to turn out and vote. I think what we possibly could see are changes impacting younger people. Right. Well, I turned 50 this year. I was almost going to say you were about to turn 50, but I know you'll get mad if I say that a couple of years, the younger you are, the more likely we are to see changes, either increasing the retirement age changes to how they calculate cost of living, maybe tweaks in the benefits of. I think you think of big changes would likely be phased in over time.
Damon La Tanzi [00:07:15]:
I don't see a large impact on current collectees of Social Security, current users of Medicare. But the point is you never know. You've got to be ready for it. But I just don't know if that's going to be what plays out, regardless of who wins, Democrat or Republican.
Mark Rowlette [00:07:30]:
Really, the way of knowing is play both sides of the coin. Right? Sit down with your people, sit down with the people who are helping you with your retirement planning and say, all right, if it goes this direction, what's going to be the impact to my bottom line? Big picture. And if it goes in the other direction, what's the impact going to be there? And the way to do that is to actually plan. Right. And how do you start doing that if you haven't started or if you're thinking, well, gosh, it's not something I've had a conversation with my people about, well, then pick up the telephone and call us. Right. 781-303-9904 781-303-9904 or go to the website retire southshore.com today. Damon, we're talking about, you know, ways the upcoming election could affect your retirement.
Mark Rowlette [00:08:12]:
Right. Could affect the bottom line, could affect the amount of money that you have to do, the things that you want to do. And to a certain degree, a lot of it's kind of out of our control. Right? I mean, this coming November, when whomever is going to be the next president or the continued president is going to have policies and, you know, plans in place, or at least thinking about pushing plans into place that are going to go kind of one direction or the other. And one of the big ones is taxes. You know, I mean, for the last number of years, like since 2017, when former President Trump reduced taxes across the board for everyone in this country, everyone's been talking about when it's going to sunset, and it's going to sunset in January 2026.
Damon La Tanzi [00:08:57]:
Right.
Mark Rowlette [00:08:58]:
And in January 2026, every us taxpayers tax bill will go up from two different perspectives. Number one, tax rates are going to go up somewhere between 15% to 25%, depending on what level of income you have, what type of income you have. But everyone, including yourself and myself, Damon, taxes are going to go up. Yeah, I can see your face. No one wants to pay taxes at all, but nobody wants to look at the writing on the wall that's etched in stone. That is probably going to be in place in 2026. But not everyone is aware of the other part of it where most of the people that we chat to, they're not itemizing their deductions in retirement. They're taking a standard deduction, and that's going to drop by 50%.
Mark Rowlette [00:09:40]:
So that's going to have a huge impact on probably a much larger scale of people around the country.
Damon La Tanzi [00:09:46]:
Right. So as you think about the upcoming election, right. If republicans win, there's probably going to be a bigger fight around extending those tax cuts. There's no guarantee they will get extended because we still have a divided Congress. And I, you know, let's say President Trump wins reelection, it's definitely not a foregone conclusion that just because he'll want to extend those tax cuts, that they will be extended. On the flip side, if the Democrats win, then there's probably going to be less of a fight around extending those tax cuts. I'm not telling you how to vote. Far be it from us, you'll make your own decision regarding that.
Damon La Tanzi [00:10:17]:
But when we're planning with our clients, we are planning as if taxes will go up and we're using strategies and assuming taxes will go up, what can we do between now and 2026 and beyond to put them in a better place? We might hope taxes don't go up, but that's not good planning. Good planning isn't assuming the best will happen and then patting ourselves in the back when it does. It's kind of assuming the worst, hoping for the best and planning around it. I think that's the big takeaway here, is that let's assume taxes go up. What should we be doing about it? Not like, oh, my gosh, taxes will go up. And that's horrible. You know, it's like, yeah, that's, that might be bad, but we've got a plan around it.
Mark Rowlette [00:10:54]:
Yeah. And I think that kind of gives people more confidence in their retirement plans if they can plan for the worst, as you say, Damon, or, you know, as we would call it, like stress test their existing retirement plan and put it under unrealistic assumptions. You know, higher than you think inflation is going to be, higher than you think taxes are going to be, longer than you think you're going to live, and less money than you think you're going to be able to achieve from a rate of return standpoint, and you can still do all the stuff that you wanted to do in retirement?
Damon La Tanzi [00:11:23]:
Sure.
Mark Rowlette [00:11:23]:
Isn't that the reason that people want to retire anyway, is to be able to have the time to do the things they didn't have the time to do before?
Damon La Tanzi [00:11:30]:
That's right. We can make a distinction between, you don't have to like it. Right. Nobody wants to have less money in their pocket versus my plan is still intact. Right. So if you're thinking about what should you be doing, what can you be doing? You know, talk to your financial people. Give us a call. 781-303-9904 visit our website, retiresouthshore.com.
Damon La Tanzi [00:11:50]:
come to one of our live events where mark, we talk a lot about taxes and a lot about strategies around, well, what if this thing happens? The point is, don't sit on your hands and do nothing. Right. Big changes are coming one way or another, and you don't want to be caught flat footed. You want to be proactive.
Mark Rowlette [00:12:06]:
Yeah, Damon, listen, I think there's so much that will impact the tax side of things depending on which side gets.
Damon La Tanzi [00:12:14]:
In the, the fighting between the two political parties is unprecedented in a way. And of course, that has implications in terms of what happens with people's money, with their retirements. And we're talking in this segment about economic policies in the stock market. You've got inflation, you've got interest rates. And I think people make a lot of assumptions around, ok, if Trump wins, that'll be better for inflation and taxes will stay low and that'll be good for the economy. And if Biden wins, taxes will go up. And that may or may not play out like that. I think these issues are complicated.
Damon La Tanzi [00:12:42]:
Many policies take years to see the impact of them. I think our takeaway for this show, Mark, is not, hey, we hope so and so wins and so and so doesn't listeners have their own opinion? But regardless of who wins, your retirement is coming or you're already there. What can you do to make sure your plan stays intact regardless of who wins, whether it's the person you want or the person you don't want?
Mark Rowlette [00:13:02]:
Yeah, I mean, you know, you could be sitting in your car, sitting at home listening and being like, you listen, the election's going to be what it's going to be. My one vote's not going to make a difference. That's really not what we're talking about. What we're talking about is looking at both sides of the coin and seeing a, if you are in a position that no matter what happens, then you are still able to stop working or go into semi retirement and utilize all of the stuff that you've worked really hard to put away during your working life to sustain your lifestyle in retirement, and then you are putting yourself in a much stronger, comfortable, confident position that your money will last for the rest of your life. And you don't have to worry about maybe not running out of money, but maybe not doing the things that you wanted to do, because a stock market dropping by 30% and coming back in a week might terrify most people. But if you ride through it, you might be okay. But what if it goes down like it has in the past and stays down for a number of years? That coincides with when you're going into retirement and now you're starting to use your money. Right.
Mark Rowlette [00:14:02]:
That's really scary for a lot of people. It's difficult enough to transition into retirement. But worrying about stock markets going down, interest rates going up, all of these different things. If you're looking at a financial plan that says, if this happens, this is what my, my strategy is going to be. And if something else happens, this is what my strategy is going to be. And having it in some sort of methodical process that is changeable because we don't know who's going to get elected. That gives you that confidence level of, yeah, I'm still going to be able to go on my retirement journey.
Damon La Tanzi [00:14:32]:
And like we talked about throughout the show, there will be challenges, there will be opportunities. So let's just say, for example, if President Trump wins, and that's good for inflation, inflation comes down. Guess what else coming down? If inflation comes down, interest rates, right. And then you can kiss goodbye your 5% savings accounts, which will eventually come back down to his historical averages, where you couldn't make much money in any kind of fixed saving money market. Cds, right? That will go away. On the flip side, if you think, oh, if Biden gets reelected and inflation will stay high, that interest rates might stay high, but that has different implications for different groups. Most of our clients and people listening to this show, they already own a house. They've probably locked in a low mortgage or they have no mortgage, right? So they're not impacted by high interest rates in the housing market.
Damon La Tanzi [00:15:13]:
On the flip side, their kids, people trying to buy their first house, that's a big problem. If interest rates stay high for them. But these policies affect different groups differently. But when they talk about it on the news, they talk about it in sort of a monolithic way, like, oh, high interest rates, horrible for everybody. Well, that's really not the whole story. And I think that's, to your point of the news shows, they have an agenda. They're selling eyeballs, they're selling ears. Try to filter through the noise and really think about how does this change, this policy really impact me and I think if you strip that away, you'll find that it doesn't have to be great, but it's not necessarily going to derail your whole retirement.
Mark Rowlette [00:15:49]:
Yeah, you want to make sure that you have enough of a cushion, because you're not wrong, Damon. Like, to your point of a lot of the people that we talk to and we serve, they're not looking at mortgage interest rates as a problem. They're not looking at, hey, if we're going to downsize our house, we already have another house, or we're going to move to Florida. So we don't need to find another place to live in. But I do see a lot, and listen, you and I and Erica are right in the weeds of this because we have kids that are in the public schools and a lot of these towns are like, hey, we need to do this, this, and this to get more money into the town. And that's going to increase the real estate taxes that everyone's paying. And if you're sitting at home with no mortgage in retirement and now your taxes have gone up by 40%, or whatever your town is proposing, they go up by, and you're being told by someone it's going to help improve your sale prices of your house and you're not planning to sell your house, you don't care about that, right? I don't want to have to pay extra amount of money. My kids have already gone through the school and it's a real reasonable thing to be annoyed about.
Mark Rowlette [00:16:47]:
Right? Quite honestly. So there is always going to be some knock on effect, even if something that is from the outside in not going to impact you at all. Right? Interest rates on a mortgage being 7% if you don't have a mortgage should seem irrelevant to you, but it isn't irrelevant because the house prices, as interest rates start to come down, will skyrocket. And guess what taxes will do in real estate taxes? They'll. They'll go up, too. So making sure that you're in a strong position, both from a stock market standpoint, a tax standpoint, but mostly money in your pocket, right? What you get to put in your pocket and how much money you get to spend on the stuff that you want to do, not the stuff that you've already been doing, like paying real estate taxes or income taxes. You don't want that to be the biggest part of your retirement budget every single year. There's so much that potentially could be talked about.
Mark Rowlette [00:17:32]:
We could go on for hours and hours on this show, but WBZ only give us an hour. I think the main point, folks, is that no matter who gets elected, it's going to impact you. It's 100% going to impact you no matter who gets elected, positively, negatively. I don't know. And if you don't know, that's a real reason to actually start looking and start planning and start proactively making simulations, even of if this happens, this is what we would do. This is what the positive outcome would potentially be. If this happens, this is what we would do. In the same end result of seeing how no matter what happens in the political environment, stock market, interest rate market, housing market, how it's going to impact you, the only way to know that is to actually proactively plan.
Damon La Tanzi [00:18:17]:
Right? And I think, imagine you've come in, you sat down with us for a few meetings, we've gone through our process, and ultimately, you walk out of that conference room and you'll know, you'll have the confidence that it doesn't matter if Trump or the Republicans win, or Democrat or Biden, whatever happens, that you will be okay. You might not like the outcome of the election. There might be other factors. Of course, there are other factors beyond just what we're talking about here that are important long term implications. But that will be a different conversation than, oh, my gosh, I'm in real trouble here with my retirement because such and such happened and taxes went up and inflation is high. Still, all of these things can be planned around. We don't have to like it, but we have to plan around it.
Mark Rowlette [00:18:56]:
I do think that there's so many different things that could potentially happen that will impact the bottom line of how much money people get to put in their pockets and how much gets to go out to healthcare costs, income taxes, real estate taxes, stock market gains and losses, interest rate increases and decreases, and all of the things in between. And the only way to know for sure if any of these things are going to impact you to the point that you have to change some of your potential plans for when you're going to retire, what you're going to do in retirement, you know, who you're going to be around in retirement, how much money you're going to have is a real reason to pick up a telephone and call a financial advisor, sit down with someone and listen. We have lots and lots of people that we've helped, that have existing advisors when we talk to them. And there's nothing wrong with the existing advisors. It's just that when you get to this stage in life, and you need to start thinking about using your money and actually spending out of the money that you've put in to these various accounts that you have during your working life. Just please make sure that you're working with firms and people that are, that that's what they do. They help people at this stage in life. And sometimes change is difficult, but sometimes change is real hard.
Mark Rowlette [00:20:09]:
And we potentially are going to see some major changes in November. And it just, it kind of, it's a resounding reminder for the listeners to potentially look and see if there's any changes that you should make to your own financial plan to better impact and better benefit you and your family.
Damon La Tanzi [00:20:25]:
Well, Mark, that was a great summary. I don't think there's anything else I.
Mark Rowlette [00:20:28]:
Can add to it that blows my mind.
Damon La Tanzi [00:20:30]:
Right?
Mark Rowlette [00:20:30]:
Something you can add to that?
Damon La Tanzi [00:20:32]:
I don't think there is. Oh, it's lovely.
Mark Rowlette [00:20:33]:
Thank you.
Disclosure [00:22:15]:
Investment advisory products and services made available through Aewealth Management, LLC, a registered investment advisor. Insurance products are offered through the insurance business Rowlette and Associates, LLC DBA South Shore Retirement Services Rowlette and Associates, LLC DBA South Shore Retirement Services is also an investment advisory practice that offers products and services through Aewealth Management LLC, a registered investment advisor. AEWM does not offer insurance products. The insurance products offered by Rowlette and Associates, LLC DBA South Shore retirement services are not subject to investment advisor requirements. Investing involves risk, including the potential laws of principal. Any references to protection, safety or lifetime income generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the issuing carrier. This podcast is intended for informational purposes only.
Disclosure [00:21:37]:
It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual's situation. Mark Rowlette and Associates, LLC DBA South Shore Retirement Services is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the US government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. By Mark Rowlette and Associates, LLC DBA South Shore Retirement Services.