Some people have told me they plan to retire abroad if Donald wins. Others have said they'll just stop working so much if Hillary gets elected. Will you be doing anything differently
if Hillary or Donald gets elected now that Donald is going to be the POTUS for the next four years? I'm curious to know whether your life changes at all after the presidential election.
My post college work career started during Bill Clinton's second term and ended during Barrack Obama's first term. Irrespective of who was president, I was focused on aggressively saving and investing as much as possible in order to escape the rat race early.
I didn't obsess about whether our president would do the right thing for the people because I believe everything is rational long term. Politicians crave power; therefore in order to stay in power, they must do right by the majority. I just focused on what I could control. You should too.
Taking Things Easier Post Obama
Obama started his presidency on January 20, 2009 in the middle of the financial crisis. Six months later I started Financial Samurai as a way to cope with the chaos.
Because I figured income taxes would eventually get raised under a Democratic president, I worked as hard as I could to make as much money as possible until I left work in 2012. The severance was an enticing catalyst to leave, but so was the likelihood of higher income taxes.
We all knew 2012 would be the last year someone could pay the highest marginal federal income tax of 35% because Obama signed a two-year Bush tax cut extension on December 6, 2010. The strategy at the time was to front load as much of your income as possible before the top marginal income tax rate went up by 4.6% to 39.6% in 2013.
Paying 39.6% federal income tax + 12.3% for California income tax + 6.2% FICA tax (on your first ~$108,000) meant paying a total marginal tax rate of over 52%. Can you imagine the government taking more from you than you could keep for yourself? That's crazy! I was already burned out from working 60-80 hours a week for 13 years, so higher taxes gave me one more reason to take it down a notch.
It has felt amazing not having to work for a living since 2012. Even though my income was much lower for two years, my happiness surged due to a lower tax bill and much greater free time. It would be one thing if the government was efficient and used 100% of my money to help the sick and poor. But when you read things like $6.8 trillion in fudged government accounting, there's no way our tax dollars are being put to optimal use.
The Obama administration has helped me live a more balanced life. If taxes were still the same under the Bush administration, chances are high I would have kept on working for six more years until my original goal of age 40. If I did, I'd probably be less healthy, more stressed out, and a much saltier person.
By raising taxes, Obama ironically allowed me to pay way less taxes while also using more public resources. Almost every day I go for a walk in the botanical gardens or play tennis at a public park. I now have the time and financial strength to have lots of kids to send them to public schools too. I even learned how to start a more tax efficient lifestyle business through an S-Corp. When I was slaving away between the ages of 22-34, I had little time to enjoy much of anything, despite paying six figures in taxes each year.
Life has been great thanks to a strong economic recovery and a tax structure that disincentives people from working crazy hard, just hard enough.
What About The Future?
As I wrote in the past, to get rich we must try to predict the future.
If Hillary gets elected, it's business as usual. We'll have to watch out for other surprise tax legislation such as the Net Investment Income tax of 3.8% introduced in 2013 for singles/married couples who make over $200,000/$250,000. Other than potentially higher taxes, it doesn't seem like many of our lives will be affected by the government. I don't think my lifestyle will change one bit.
If Donald gets elected, it's hard to know what to expect. Due to uncertainty, the stock market might sell off by 5% – 15% just like what happened post Brexit. As time passes, there will be more clarity from Donald on his various policies, and the market should recover and begin to trade on fundamentals again.
One of my biggest concerns now that Donald is elected is that my life will change for the worse due to my own greed. Donald will probably try and lower taxes for everyone, especially since Republicans control the Senate and House. As a result, I'll be highly tempted to find full-time work again and more consulting gigs to boost my total income. I'll also start publishing more content on Financial Samurai to try and generate more traffic and revenue. I may even try and start a bigger business that piggybacks off the Financial Samurai content. All this means an extra 40-50 hours of work a week!
Going back to working 60 – 80 hours a week as a middle-aged man sounds very depressing. But it's very hard to pass up a deal, even if the deal is just letting you keep ~5% more of your money each paycheck.
Whoever wins, my hope is the government will continue to be dysfunctional and gridlocked so the doers of the world can keep on doing what they've always been doing. I'm not going to let a president get in the way of my freedom!
Update: Trump wins! Amazingly, Republicans now control the Presidency, Senate, House, and will choose a new Supreme Court Justice. Let's hope Donald can start work on healing our nation quickly, at least for our investment's sake.
Readers, tell me how you think your life will change under a Donald presidency?