Election Season and Your Retirement: What Actually Deserves Your Attention

You're 61, three years from your retirement, and every commercial break says the country's future rides on one Tuesday in November. You open your account app, check the balance, close it. Twenty minutes later, you open it again.

That anxious feeling, unfortunately, is normal. Election season is designed to make everything feel urgent. But your retirement plan runs on a much longer clock than any campaign. So, let's sort out what may deserve your attention, and what probably doesn't.

The stock market is a market of stocks

Sounds obvious, I know, but it's easy to forget. "The market" gets talked about like a single, monolithic mood that swings with the news. At its core, though, it's a place where people buy and sell slices of ownership in real businesses.

When you own an S&P 500 index fund (or a bunch of companies in it), you own a small piece of roughly 500 large American companies. Those companies make toothpaste, run hospitals, ship packages, write software, create new technologies, and even sell groceries.

So here's what i hope feels like a fair question:

Will those companies stop being viable businesses because one party or the other wins an election?

Will people stop buying groceries? Will hospitals close their doors? Will the memory chip makers stop making AI chips?

History suggests that's unlikely. Businesses adapt to whoever is in office. They adapt to new tax rules, new regulations, new competitors, and new technology. Adapting is a big part of how large companies stay large. Adapting is, well, part of American exceptionalism.

Now, to be fair, not every company thrives. Some shrink, and some fail, and it's usually not a result of a political party winning. If we're using the S&P 500 as a reference, the index handles that by removing companies that fade and adding companies that grow. That built-in turnover is one reason broad diversification may matter more than trying to predict any single winner, or any single election. 

What the long-term record suggests

Researchers have sliced stock market returns by which party held the White House in just about every way you can imagine. Here's the funny part. The answer depends on how you measure it. Use one method, and one party looks better. Use another, and the other party comes out ahead. Both sides can point at the same data and declare victory.

Here's what has held up far more consistently, regardless of the perspective: the cost of letting politics drive investment decisions. Studies by many sources, including companies like Fidelity and Capital Group, have shown that investors who only stayed invested while their preferred party was in office would have ended up with far less than investors who stayed invested through every administration.

Capital Group examined the last 23 election cycles and compared investors who stayed fully invested against those who moved to cash until after the election. The cash approach came out worst in 17 of those 23 cycles. Over a longer stretch, a $1,000 investment in the S&P 500 made when Franklin Roosevelt took office (way back in 1941, Standard Statistics and Poor's Publishing merged and created what was known as the S&P 90, the precursor to the S&P 500) would be worth close to $22 million today, spanning eight Democratic and seven Republican presidents.

Over long periods, economic cycles, interest rates, and company earnings have tended to move markets more than election results. Past performance doesn't guarantee future results, of course. But the pattern is worth knowing before you make a big move based on a headline.

When policy does deserve your attention

None of this means laws don't matter, because they can. The tax code appears to be written in pencil, Social Security rules change. Even the age for required minimum distributions has changed numerous times in less than a decade.

Oregon public employees have seen this up close. In 2019, the legislature passed Senate Bill 1049. Starting in 2020, for PERS members above a monthly salary threshold, part of the 6% Individual Account Program (IAP) contribution began going into a new Employee Pension Stability Account to help fund their pension.

That was a real change. But notice where it came from: not a political party per say, but a specific law, with specific rules, that people could read and plan around. Members who reviewed their options and adjusted were in a stronger position than members who simply worried about it.

That's the difference that matters: policy change gives you something concrete to respond to. An election result, on its own, usually does not.

What a plan built for change may look like

You can't control who wins. You can control how prepared your plan is for whatever comes next. For many people, that may include a mix of taxable, tax-deferred, and Roth accounts, so future tax changes don't hit every dollar the same way. It may include a cash reserve, so a rough market stretch doesn't force you to sell at a bad time. And it may include a Social Security and pension strategy that gets reviewed when rules change, instead of being set once and forgotten.

None of those different pieces depend on predicting an election - that's the point. They're designed to work in more than one future.

Your action steps

1. Set a check-in limit. During election season, decide in advance how often you'll look at your accounts. Once a month is plenty for most retirement plans.
2. Write down what would actually change your plan. Do it before the results come in. If the only answer is "who wins," that may be a signal to wait.
3. Review your tax mix. Look at how much of your savings sits in taxable, tax-deferred, and Roth accounts. More balance may give you more options if tax laws shift.
4. Confirm your cash reserve. Make sure you have money set aside for near-term spending, so you're less likely to sell investments during a downturn.
5. Watch for laws, not headlines. When a change passes that touches your taxes, Social Security, or PERS benefits, that's a good time to schedule a review.

The perfect retirement plan, for you, is the one you act on!