Ask Jill: Does My Vote for President Make a Difference for My Finances Next Year?

Welcome to “Ask Jill,” where Jill Schlesinger, CFP®, the award-winning Business Analyst for CBS News, answers your financial questions. You can email her directly at:

Ask Jill

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QUESTION: “I’m voting on Nov. 3. How do you think the results of the presidential election will affect my finances next year?”

Jill Schlesinger: While the specifics of your situation may change, I’m not sure there are proactive moves to make now. 

If Trump is re-elected, there is not likely to be any changes to the tax code—that already happened in 2017. If Biden wins, some of the Trump 2017 tax cuts will likely be rolled back for wealthy Americans. According to the Biden website: “Joe Biden will not raise taxes on anyone making less than $400,000. Period.” Biden has proposed to return the country’s top individual tax bracket to 39.6% from the current 37% and would require those making more than $1 million to “pay the same rate on investment income that they do on their wages.” On the corporate tax side, Biden would raise the corporate tax rate from 21% to 28%. (Before the tax law changed in 2017, the rate was 35%.)  

But here’s something else to consider: regardless of who wins, the nation is on an unsustainable fiscal path – and that fact could be far more impactful on your financial life than any tax policy that is enacted over the next few years. Are you ready for deficit/debt boot camp? Here goes.

Every year, the government takes in money, mostly in the form of tax receipts. If the amount taken in is less than the amount the government spends, then the country runs a deficit. For fiscal year 2020, the Congressional Budget Office (CBO) projects a federal budget deficit of $3.3 trillion in 2020 ($3.3 trillion in revenue and $6.6 trillion in spending), which, according to CBO, “is more than triple the shortfall recorded in 2019, mostly because of the economic disruption caused by the 2020 coronavirus pandemic and the enactment of legislation in response.”

The U.S. came into the pandemic with a pile of debt, which has only grown larger amid the pandemic-induced recession. CBO projects that in 2021, the U.S. debt will grow larger than the total economy for the first time since 1946, right after the government financed World War II. 

Here’s the problem and why it could impact you: because of the various popular – and necessary – spending programs, like Social Security, Medicare and Medicaid, there is going to be pressure on the government to raise taxes. And not just on the wealthiest 5% of taxpayers; on EVERYONE. Although the country has been running a deficit for years, without causing interest rates or inflation to rise, there’s always the chance that a new administration or a change in control of Congress could prompt a renewed effort to reduce the deficit and debt by increasing taxes. 

So as you examine your financial life and project far into the future, you may be wise to consider that overall taxes are likely to be higher over the long term, whether it’s the next administration that raises them or another one down the road. That could make a Roth IRA valuable right now (or a conversion from a traditional to a Roth). With a Roth, you will pay taxes at today’s presumably lower rates and withdraw your money at retirement without subjecting yourself to higher tax rates.

“I’m in debt. How much is it OK to spend on holiday shopping this year?”

My initial reaction after reading the question was: if you are carrying a load of consumer debt (i.e. credit cards, auto loans, personal loans), then the answer is easy: YOU CAN SPEND $0 THIS HOLIDAY SEASON.

But I don’t want to go full-on Grinch, so let’s be a bit more nuanced and also recognize that you may want to celebrate with kids, who don’t really want to know why your debt is their problem at holiday time.

The good news is that amid COVID-19, you are not going to be alone when it comes to spending less this holiday season. According to a September 2020 survey of American adults from Morning Consult, “People at all income levels have economized during the pandemic, and at least some of this economizing is bound to persist.” In fact, 39 percent of those surveyed plan to cut back on the amount they spend on gifts. Additionally, because physical gatherings will be few and far between (and those that occur will be smaller), more than two-thirds of respondents? say that they will be spending less than usual on holiday celebrations with friends, family, and co-workers.

As far as gifts, you may want to consider this: social scientists say that experience-based gifts are the ones that create lasting happiness. In our pandemic reality, that may be hard to pull off, but maybe you can create a “gift certificate” for a special walk/hike/bike ride with a loved one. Another idea is to offer to use a skill of yours to improve someone’s lockdown lifestyle. For example, I have a neighbor who loves to do home improvement jobs, so for his adult son’s birthday this summer, he offered to help rebuild the deck. Or maybe you are highly organized and your gift to your sister is to organize her pantry or closets, a la Marie Kondo.

Whatever you choose to do, know that both you and the recipient are likely to benefit from a more thoughtful gift—one that doesn’t add to your own financial burden.

“What do you think of the FIRE movement? Do you think it’s truly possible to retire at 40 and live off your investments?”

I love the FIRE (“Financial Independence, Retire Early”) movement, because the ideas espoused are simple and effective: don’t spend more than you earn; reduce major expenses with cheaper alternatives; avoid debt; cultivate side hustles or part-time work; put your savings on autopilot and invest in low-cost index funds; and don’t  over-withdraw from your retirement account.

Is it possible? Yes, but it is hard to execute. The father of the movement, Peter Adeney, (aka Mr. Money Mustache) has said, “Everybody uses the FIRE acronym because it is catchy and ‘early retirement’ sounds desirable. But for most people who get there, financial independence does not mean the end of your working career. Instead it means, Complete freedom to be the best, most powerful, energetic, happiest and most generous version of you that you can possibly be.’”

The power of the FIRE movement is about being in control of your mid-life decisions by taking action early in your career. If you are entranced by the concept, I recommend that you check out the documentary Playing with FIRE, which follows 35-year-old Scott Rieckens, his wife Taylor, and their toddler on a year-long odyssey to understand the rules of the FIRE movement. Director Travis Shakespeare brings us on their nomadic journey, which may or may not lead to their financial independence.

Of course, the answer to whether FIRE can work depends on what YOU need and what you are willing to forego. And this may be the hardest part of the FIRE movement. Sometimes at age 25, 30 or 35, you may think that you could live on much less than you ultimately need. A good place to start is to track how you spend money today and be honest about whether some of your expenditures bring lasting benefit to your life. If not, cut them out. Of course, you may not know whether or not you will partner, have kids or even have to take care of an aging relative, but starting the planning process early and then reviewing it annually makes it more likely to achieve your goals.