|Legislation After The Election Will Be Particularly Impactful On The Investment Landscape|
|Monday, May 07, 2012 14:33|
There are multiple factors that determine how much money your clients will need in retirement. The issues facing Congress from a budget standpoint are right in there with them. Calculators that help people determine how much they will need to save to ensure they can retire comfortably may not take Congressional budget decisions into account.
This Website Is For Financial Professionals Only
The issues that will demand some type of decision after the election later this year have to do with the amount of debt the US is likely to have, the amount of Social Security benefits your clients will actually receive, and how realistic it is for clients to count on Medicare to subsidize health costs that will only increase as they age.
The closer the federal debt gets to 100% of gross national product (GDP), the more pressure will be applied for the US to find some solution. Looking externally hands even more control of our country’s fate to others. We traditionally have looked to other countries to buy our bonds and to subsidize our increasing debt load. The closer we get to 100% of GDP, the more we begin to look like Greece, Portugal, and Spain.
Social security benefits may be cut as the projected year for the fund to go bankrupt edges closer and closer. The assumption that Congress will pass the 31% cut to doctors’ reimbursements is based on a precedent that doesn’t exist. Although they may seem indirect, the consequences of legislation in these areas will have an impact on retirement income for which clients need to be planning before rather than after the fact.