Now that we’ve grabbed your attention and raised your blood pressure with the headline, let us assure you that we have only good news.
While there is no formalized plan, and the specifics are somewhat murky, one thing is clear about the collection of pending tax legislation: These potential changes will more than likely have no impact on 95% of investors.
In fact, most of the proposals/reforms/changes relate to businesses and high-net-worth individuals. The fear, though valid, that these changes will affect everybody, and dramatically so, is not worth it’s salt. And the irony is that the people who will be affected are generally not the ones who are biting their nails and searching the internet for answers.
Having a solid financial plan in place is the best possible way to ease the anxiety of potential changes in tax codes or the markets. Here are a few important steps you can take to prepare, no matter what happens:
- Don’t automatically take out money or pay additional taxes this year because of an assumed increase in 2022.
- Remember that many of these changes are unlikely to receive the necessary support to become law. They’re the equivalent of the juice cleanse you attempted in January—seems like a good idea in the beginning, but never really makes it to the end.
- Some of these proposals are simply negotiation starting points. Imagine a three-year-old demanding five ice cream sandwiches. He knows he won’t get five, but he’s hopeful that he’ll wrangle at least one, maybe two out of your huge, strong-enough-to-open-the-freezer hands. Legislators often propose the impossible in hopes of acquiring the probable.
- Many of these proposals won’t affect only a small percentage of the population if they are enacted; they will also impact only a specific subset (e.g., people who inherit homes in large metro areas where the housing market has exploded; people who make over $1 million annually).
- We mean that kindly. Change is constant and to be expected. Whether it’s aging, job transitions, relationships, the weather, or taxes—our lives, our country, and our world are in constant flux. That knowledge doesn’t have to scare us.
- Talk to your financial advisor. Helping you navigate these matters is one of the main reasons they exist. If you don’t have a financial advisor, we would be happy to .
Take heart. In the words of Michel de Montaigne, “My life has been full of terrible misfortunes, most of which never happened.”
If you’re still nervous about taxes, saving for retirement, or whether you’ll ever pay off your mortgage, that’s okay. There’s a reason we’re called Anchor Wealth Management. Unlike the weight of debt and financial insecurity, we aim to be a source of stability, guidance, and safety, so you can weather any storm.