Why does President Trump tweet so much about your 401(k)? – By Alessandra Malito (market watch) / Oct 26 2018
President Donald Trump isn’t just taking credit for rising 401(k) balances in his tweets — he may be urging Americans to vote Republican during the coming midterm elections.
Best Jobs Numbers in the history of our great Country! Many other things likewise. So why wouldn’t we win the Midterms? Dems can never do even nearly as well! Think of what will happen to your now beautiful 401-k’s!
— Donald J. Trump (@realDonaldTrump) October 21, 2018
In his recent tweet about 401(k) plans on Sunday, the president touted the “best jobs numbers in the history of our great country” and said Democrats could never do nearly as well. “So why wouldn’t we win the Midterms,” he said. “Think of what will happen to your now beautiful 401-k’s!”
He wasn’t referring to how the Nov. 6 election itself will affect the stock market (SPX) (and thus retirement accounts). The market is cyclical, and often reacts to elections, whether presidential or not. Trump was suggesting that voting Democrats into Congress would have a negative impact on the future of these retirement plans, such as changes to his recent tax law and economic policies. “It’s a political move to elicit an emotional response,” said Mike Giefer, a wealthcare adviser at The Johnston Group in Minneapolis. “It’s to drum up his voter base and nothing more than that.”
A critical midterm election
Americans have their eyes on the midterm elections this November, more so than in recent years. Nearly two thirds of registered voters showed interest in the midterm election coming up, according to a Wall Street Journal/NBC poll, the highest recorded since the first poll of its kind in 2006.
Tension has been escalating between the Republican and Democratic parties, in light of Supreme Court Justice Brett Kavanaugh’s confirmation to the court, as well as immigration, health care and other social issues.
Along with political tensions, Americans are also anxious about retirement preparedness. Millennials, for example, are worried over their finances and whether they’ll ever be ready to retirement — even if retirement account balances are rising, according to a recent Fidelity Investments analysis of its quarterly data. Even near-retirees with significant retirement savings (about $400,000) felt behind, Allianz Life Insurance of North America found, and a majority are concerned they won’t have a comfortable retirement.
Some Americans are even worse off, considering many are without any retirement plans, let alone a 401(k). Only 14% of employers offered 401(k) plans in 2012, according to a January 2017 report from two U.S. Census Bureau researchers.
What’s at stake for your 401(k) — and Trump
Democrats have been critical of Trump’s tax law, known as the Tax Cuts and Jobs Act of 2017. No Democrats voted for the tax bill last year and have continued to criticize it, saying it mostly benefits wealthy households. They’ve also argued the tax law will increase federal budget deficits for the foreseeable future, while Republicans countered the TCJA will boost the U.S. economy.
Last week, the Treasury Department reported a $779 billion deficit for the fiscal year ending Sept. 30, up $113 billion.
What Trump’s tweet about your retirement plan really says is: if Democrats get control of Congress, they’ll repeal his tax reform, which will hurt the economy, employment and wage growth, said Allan Katz, founder of Comprehensive Wealth Management Group in Staten Island, N.Y. “His tweets are calculated,” Katz said. “He knows what he’s trying to accomplish and it has nothing to do with your 401(k), but the midterm election.”
Even a so-called “blue wave” in which Democrats would capture control of both the House and the Senate would leave them short of a veto-proof majority, according to election forecasting models, to get legislation through Trump without his consent.
Then there are other economic policies at risk, Katz added: trade relations with Canada and China, loose regulations on small businesses. “Democrats seem to want to return to a higher tax, higher regulation and bigger government environment,” he said. “As we have seen from the previous administration, this is not good for economic growth, job creation and in the long term fundamental strength of the stock market.”
The president’s previous tweets on 401(k) plans have taken credit for how well the stock market is doing since he was elected, which translates to greater returns in retirement accounts. His recent tweet on 401(k) plans suggests something along the lines of: “if you elect someone else who is not embracing my philosophies and programs, it will hurt your pocket book,’” said Dennis Nolte, vice president of Seacoast Investment Services in Winter Park, Fla.
Putting Pelosi/Schumer Liberal Puppet Jones into office in Alabama would hurt our great Republican Agenda of low on taxes, tough on crime, strong on military and borders…& so much more. Look at your 401-k’s since Election. Highest Stock Market EVER! Jobs are roaring back!
— Donald J. Trump (@realDonaldTrump) December 4, 2017
Where to focus your energy
Americans with 401(k) plans should not run to their plan administrator to change their contribution rates or asset allocations, advisers said. “If you’re someone working and saving in a 401(k) plan, your long-term savings strategies won’t be materially impacted by who won the midterm elections in 2018,” Giefer said. “Focus your energy elsewhere, on things you can control.”
Some suggestions: don’t touch your retirement account out of fear for what will happen in the market, but do make sure you’re aware of how you’re retirement plan is invested and that you’re comfortable with it. “It doesn’t matter who is in office,” Nolte said. “You just have to make sure what your goals are and what risk you can tolerate.”
And then take tweets about the stock market — from the president, from Elon Musk (the former chief executive officer of auto maker Tesla (TSLA) who tweeted about taking the company private and caused chaos), or from anyone else — with skepticism. “Reach out to someone who you can figure out your personal situation with but don’t make rash or emotional decisions based on what you read on social media,” Geifer said.
