Like many of you, I’ve been wondering how Joe Biden, a Democratic President will affect my life. And I’ve come to the conclusion the best time to retire may be under a Democratic President like Biden. For those who are close to retirement or constantly thinking about retirement, this post is dedicated to you.
In general, I’ve tried not to rely on the government for anything. Instead, I’ve been indoctrinated since getting my first job that it is my civic duty to pay my fair share of taxes to help others without similar opportunities.
However, after about the 11th year of working in finance in 2010, I started to burn out. By the 13th year, I was done for good. Sayonara!
With a heavy workload, higher income taxes and a new Net Investment Income Tax introduced under the Obama administration, I decided the marginal effort was no longer worth the marginal reward.
Although I felt bad about no longer paying $100,000+ a year in income taxes to help our great country, I found greater happiness. Instead of taking a red-eye flight for one client meeting, I could finally enjoy the parks and libraries that were supported by my tax dollars. Instead of getting into the office before 6 am most mornings, I could sleep in until 7 am.
Life was very comfortable living off less and forsaking the constant hustle for more money. The constant pursuit of money and prestige made me unhappy. So I took action to change my life for the better.
Then everything changed starting in 2017 under the Trump Presidency.
The Best Time To Retire May Be Under A Democratic President
From 2012 until the middle of 2017, life was fantastic. My stressful job was gone and my mental and physical health recovered. The gray hairs that started to sprout in 2011 went back into hibernation.
Instead of being bored in retirement, I found joy playing tennis and softball. For three years, I fulfilled a goal of coaching high school tennis for 3-4 months a year. Further, my wife and I welcomed our first child.
The period between 2012 – 2017 provided for the best “retirement” lifestyle I could have ever hoped for.
Then, in 2017, Donald Trump decided to fulfill one of his campaign promises and cut taxes. The Tax Cuts And Jobs Act (TCJA) went into effect in 2018 and income taxes were lowered.
No longer was there a 39.7% marginal tax rate. Corporate tax was lowered to 21%. Small business owners could also deduct 20% of qualified income for qualified pass-through entity business owners.
Perhaps most enticing about the TCJA was the doubling of the estate tax threshold from $5.49 million per person to $11.18 million per person. Today, the estate tax threshold is $11.7 million per person. That’s massive and encouraged me to try and build more wealth.
Couldn’t Fight Back Greed
Suddenly, after five years of not focusing on making much active income, the desire to make more money started rearing its ugly head again.
Greed looked back at me and said, “Come along now. The opportunity is NOW to make as much money as possible before taxes go up again.“
For years, I beat Greed back with a stick. I told him I was happy with what I had. Plus, I was busy being a first-time dad and had no desire to trade time for more money.
Despite the TJCA going into effect in 2018, I held strong against the pursuit of money. It was hard because everywhere I looked, I saw people my age work tirelessly to build their wealth. After all, your 40s are when you’re supposed to make the biggest bucks.
The supplemental income I earned on Financial Samurai was more than enough to pair with our existing passive income to lead a comfortable middle-class lifestyle.
I thought I had found a balance that would last forever. I was wrong.
The Rise Of Greed
Then in July 2019, I reached a milestone of publishing 3X a week for 10 straight years. I was proud and decided to publish this post to celebrate: The Secret To Your Success: 10 Years Of Unwavering Commitment. I wrote it to help motivate others to keep going with their endeavors as well.
In my arrogant, approval-seeking mind, I thought I would receive a tidal wave of congratulatory comments. 10 years of never missing a beat and writing for free is quite a feat! Instead, the feedback was more like a quiet stream in the woods you could barely hear unless you stopped to listen.
It was during that July month in 2019 I made a pact with Greed.
I told him I would focus more on entrepreneurship and less on retirement until the next presidential election. Readers didn’t seem to really care about the 10-year milestone.
In an environment where we expect everything to be given for free, yet aren’t willing to work for free ourselves, I felt like I was taken a bit for granted. Therefore, I decided to be more selfish for myself and my family.
Doubting The Best Time To Retire
I told Greed that if Donald Trump got re-elected, I would continue to make more active income. If a Democrat was elected President, then I would go back to living a more leisurely life.
I also made a pact with Good. I told her that with more money, I would once again pay over six-figures in income taxes to better help society. Being richer would also better enable me to take care of my family. Good gave me the green light.
So starting in early-2019, off I went to vacuum as much money as I could from the universe while also trying to balance family time. I woke up by 5 am to focus more on entrepreneurship and less on fun online.
After a year of hustling, I made more money. But I was not happier. Instead, I became agitated whenever a business-related matter arose and I wanted to do something else. But, I felt pressure to hustle on business development and more.
The Pandemic And Joe Biden’s Win
As soon as it was announced that Joe Biden and Kamala Harris won on November 7, 2020, I felt a breeze of relief. When they were finally sworn into office on January 20, 2021, I finally felt I could relax.
The relief came mostly from feeling I could finally take a break from the grind. Under lockdown, the grind has been 24/7.
America is a capitalist country. Donald Trump is a billionaire businessman. Therefore, under Donald Trump, America had the most alpha pro-business attitude possible. It was only natural to also want to work as hard as possible to make the most money as possible.
When we pulled my boy from preschool in February 2020, the days got extremely long. Because I promised to be more business focused for as long as Trump’s tax policies remained intact, every day felt like I was back to working banking hours.
And banking hours are horrible! All these analysts today at Goldman Sachs and other firms working 90+ hours a week are a sight to see. They will eventually make more than $400,000 a year, but I’m not sure they will be any happier.
Under Joe Biden, there will be higher taxes and more regulation to try and help the middle class and poor. For most of Joe Biden’s life, he was not a deca-millionaire. Dr. Jill Biden is also an educator who doesn’t make much money.
Therefore, it is only natural to want to take things easier under Biden’s Presidency. The essence of the Presidency has changed. And no, Joe Biden isn’t a Socialist. He is a Moderate.
After a rough 2020 and start of 2021, who doesn’t want to take a break from the grind?
It’s Worth Taking Things Down
I’m thankful to Greed for pushing me to boost our net worth since we now have a second child. But I’m also relieved he’s going to stop bothering me.
Realistically speaking, 2021 may be the last full year of low taxes. It took almost two years after Donald Trump took office for the TJCA to pass. I fully expect Biden to fulfill his campaign promise and raise taxes on individuals or families making over $400,000 a year, especially with a Democratic majority in both chambers of Congress.
Even though I’m not a fan of higher taxes due to an inefficient government, I am a huge fan of enjoying life to the maximum. Knowing there’s a rough deadline for when I no longer have to chase money makes the journey easier to endure.
Two children and a pandemic have really burned me out. The exhaustion I have today reminds me of how I felt in 2011, 12 years into finance. My mind was spinning over ways to get out with a nice windfall. It felt so good to finally leave work behind the next year.
2021 will be my 12th year running Financial Samurai. Maybe history will repeat itself by 2022. Maybe Financial Samurai will be sold and I will start a new venture. Who knows, but I’m ready for a change. The best time to retire is when the government is soon.
Financial Support Under A Democrat President
We learned the S&P 500 performs well, no matter who is in power. Therefore, stock market investors shouldn’t be too concerned if a Democrat is President. Sure, it would have been better to have gridlock in Congress based on historical returns. Maybe gridlock will return again.
Let’s hope the good times continue for investors. I’ve predicted 2021 will be another good year for stocks and real estate. If stocks and real estate indeed provide another positive return, investors will have even less of a need to make active income. A positive 2021 will feel like gravy, making 2022 potentially the best time to retire.
More Help For Those Who Need It Most
The pandemic has affected us all, some a lot more than others. We need to help those who have suffered the most and are still struggling. Due to sheer bad luck and government-forced shutdowns, so many small businesses and its employees have been devastated.
There will be more government support for the pandemic provided under Joe Biden. Biden’s $1.9 trillion stimulus package was approved. Now there should be a $2+ trillion infrastructure package to help boost the economy as well.
The $1.9 trillion passed rescue package includes:
- $1,400 in stimulus checks to eligible recipients
- A boost in enhanced unemployment benefits to $400 a week through September
- A boost to the Child Tax Credit to $3,600 for children under age 6 and $3,000 for those between ages 6 and 17 for a year. The credit would also be made fully refundable.
- Another PPP program for small business owners
- A $15/hour national minimum wage
The Federal Reserve has also promised to stay accommodative long after there is inflationary pressure. As a result, our investments also have a positive tailwind.
The Best Time To Retire Is When There’s More Financial Support
When a President clearly telegraphs more financial support for Americans, Americans should feel less stressed about their financial future.
With more money from the government, Americans won’t need to work as much, at the margin, to make more money.
With the proposed cancellation of $10,000 – $50,000 in student loan debt, more Americans can borrow to attend college without having to pay the money back. Parents won’t have to work and save as much to fund their children’s 529 plan. Children won’t have to work as much to earn income to fund their Roth IRAs.
The more the government can provide financially, the less we have to provide financially for ourselves. As a result, at the margin, the best time to retire may be under Joe Biden or Kamala Harris, if she eventually becomes President.
Some may think it’s dishonorable to rely so much on the government for financial support. Others may think that politicians are mainly egomaniacs who crave power and attention, and therefore, should not be trusted. Yes, there is some truth to these beliefs.
However, after decades of busting your butt for a better life, don’t let honor and pride get in the way of getting government assistance. Goodness knows you’ve already paid a tremendous amount of taxes already!
Money Is Psychological
So much about money is psychological. You can follow all the “rules” of personal finance. But, at the end of the day, buying a house, buying a car, relocating for a job, investing in stocks, paying for college, and deciding when to retire is an emotional decision.
If you have a job, it is easy to pontificate about appropriate safe withdrawal rates when you don’t plan to retire for years. However, deciding how to spend your money once you and your spouse no longer have steady paychecks is a completely different situation.
The reason why people suffer from the “one more year syndrome” is because they are simply too afraid to leave a steady paycheck behind. They fear they might run out of money in retirement. If they actually do retire, often there is some type of insurance policy like a working spouse.
There are many negatives of early retirement people don’t like talking about. These negatives can distract you from your goals and following retirement models.
Think about how emotional it is to buy a house when you are expecting your first child. It’s like going to the grocery store after not eating all day.
The desire to protect your child may ironically end up putting her into jeopardy because you overpaid. Rules like my 30/30/3 home buying rule are there to help you tame your emotions.
Emotion Tends To Always Win
However, in the end, emotion often trumps logic. Emotion is why we would rather lash out at others instead of taking action ourselves. Emotion is also why we end up in a bad relationship for too long.
The best time to retire is when you feel safe and secure. Thus, the best time to retire may also be when the government promises to spend an endless amount of money to rescue the economy from disaster.
We’ll just have to thank foreigners and our grand kids for funding and paying back our debt.
Retiring Under A Democratic President
Psychologically, it should be easier to retire under a Democratic President because you know taxes are going up to fund greater social safety nets for all. Therefore, it’s better to work less and enjoy the benefits of a greater social safety net. Again, this thought process is more relevant for those who are close to retiring or constantly thinking of retiring.
The ideology changes from “every man for himself,” to “leave no man behind.” Under a Republican President, there seemed to be maximum fear of missing out on building a great fortune. That FOMO should slowly dissipate under a Biden presidency.
Example Of An Ideological Shift
A great example of this ideological shift is the abolishment of high school entrance exams for a lottery system.
When I heard schools like Lowell High School and Thomas Jefferson High School were doing away with their entrance exam, I felt conflicted.
I had mentally committed to dedicating two hours every weekday to teach my kids for 18 years. With supplemental knowledge from their old man, maybe they’d do better in school.
Now, maybe being so involved in my childrens’ education isn’t as necessary. With a lottery entrance system, no matter how hard my kids study or how much I teach them, we cannot improve their chances of getting into school. We also refuse to buy our way into private schools like I hear some families do.
Therefore, I might as well spend those two hours a day on my health. Or at least feel less guilty on the days I spend less time teaching my son.
Hopefully, my kids will also enjoy their lives more with less intense studying and tutelage from me.
Less Worry About The Future
When you worry less about falling through the cracks, you have less anxiety. And when you have less anxiety, you feel more comfortable letting go of the pursuit of money. The best time to retire is when you’re most at peace.
Yes, some may take things to the extreme and take advantage of government programs not intended for them. For example, there are millionaire early retirees receiving healthcare subsidies. That doesn’t seem right, but it’s not illegal.
However, with more opportunities, less competition, and more government safety nets, there is simply less worry about the future.
I went to Europe many times before the pandemic. So many people there seem happier working less than 40 hours a week. Their healthcare is highly subsidized. Further, getting a college education is cheap.
Even though America’s capitalist culture has produced far more innovators than Europe’s more socialist culture, Europeans have also been able to greatly benefit from our hustle. Isn’t it great to benefit without having to do any or most of the work? Of course it is.
Our children are going to have an easier time launching. This should lower a parent’s worry.
The Need To Make More Money Has Faded
I’m looking forward to returning to retirement life again by 2022. My goal is to retire once there is herd immunity or once taxes go up, whichever comes first.
The need to make more money has faded under a Democratic president. As a result, the need to spend time working for money has gone down. Being able to win back my time as the economy opens back up is huge!
Here are some things Biden’s administration will try to do or help you with:
- A push to make community colleges and state colleges free. As a result, there won’t be as big of a need to contribute to a 529 plan. There should be less desire or need to get into a prestigious school given we’ll focus more on the learning and less on the status.
- $10,000 or more of student loan debt may be cancelled, making it easier to take out debt since you won’t have to pay it back.
- The estate tax threshold may get cut. As a result, it’s better to spend more money now than accumulate more if your estate is forecast to bump up against the new threshold. If your estate is already above the threshold, then by all means spend to the max.
- There should be less fear of anybody going bankrupt due to soaring health care costs. Health care premiums are still ludicrous, but there should be greater confidence the worst case scenario will no longer happen.
- If you are a stressed out, dual-income professional household making over $400,000, you might start smelling the roses more given your taxes are going up.
- If you are an underrepresented or marginalized group, you may receive more opportunities.
- There should be less fear of getting kicked out of your home due to a rent moratorium that will be extended until September. There will also be a mortgage moratorium as well.
The Best Time To Retire Is Coming Soon
It’s been a good financial journey under Trump. Hopefully all of your investments have done well as well. However, if you’re exhausted, the best time to retire may be under Joe Biden.
We could all use a break and recharge after such a stressful and uncertain 2020/2021. Now, let’s give the younger generation a chance to build tremendous wealth.
Achieve Financial Freedom Through Real Estate
If you agree the best time to retire is under a Democratic president, then you should build as much tax-efficient passive income as possible. Real estate is my favorite way to achieving financial freedom because it is a tangible asset that is less volatile, provides utility, and generates income.
In 2016, I started diversifying into heartland real estate to take advantage of lower valuations and higher cap rates. I did so by investing $810,000 with real estate crowdfunding platforms. With interest rates down, the value of cash flow is up. Further, the pandemic has made working from home more common.
Take a look at my two favorite real estate crowdfunding platforms. They are free to sign up and explore.
Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eFunds. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing. For most people, investing in a diversified eREIT is the way to go.
CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations, higher rental yields, and potentially higher growth due to job growth and demographic trends. If you have a lot more capital, you can build you own diversified real estate portfolio.
Free Retirement Management Tool
If you plan on retiring, it’s good to us a free retirement tool. My favorite one I’ve been using since 2012 is by Personal Capital. Personal Capital helps me x-ray my investment portfolios for excessive fees, track my net worth, and figure out my retirement cash flow.
If you have a sizable investment portfolio, Personal Capital’s free tools are the best. There is no rewind button in life. Get your finances down right the first time.
Readers, psychologically, do you think it’s easier to retire under a Democratic President versus a Republican President? When do you think is the best time to retire?
To reiterate, this post is geared towards those who are close to retirement, constantly thinking about retirement, or are simply burned out. For all of you who are still early in your financial independence journey, keep working hard, saving aggressive, and investing wisely. And no, Joe Biden isn’t a Socialist.