Giving Thanks and Paying Yourself First


As we roll into the one-year mark since the 2016 Presidential Election, we have much to be thankful for. The stock market as measured by the S&P 500* recently closed at its very highest level ever recorded. The unemployment rate is at 4.2% as measured by the Bureau of Labor statistics. Genesee County’s housing market has returned to pre-financial crisis levels. Clients ask me if these stats really have to do with our current President or not, and my response is often, “It doesn’t hurt that the only thing President Trump cares about is business and the economy.” I won’t give him credit for everything; but, I do believe that the American capitalists have had their animal spirits awakened and are making business decisions based on the new reality that businesses and the economy will remain the Trump Administration’s primary focus. Whether this administration lasts six more months, three more years, or seven more years, it’s almost a sure thing that President Trump hopes to be known as the “most pro-business President” in history.

So, as I ponder who will benefit from our pro-business President, I’m lead to the same answer: people who own things could benefit most from this administration. Who has benefited so far? Homeowners and business owners all seem to be in the same boat in terms of things being better than they were a year ago. Some of our readers will have been lucky enough to have been a homeowner or a business owner; but I’m hoping that the majority have taken our previous advice about paying yourself first, and have started putting money away in their retirement accounts.

As a friendly reminder, one option to start saving for retirement is with a company-matching 401k or 403b account. With these employer-sponsored plans, your employer can match your contribution up to a certain percentage of your income. For many employers, one “safe harbor match” is to match 100% of the first 3% of employee income, and then 50% of the next 2%. It works out to a 4% match if the employee puts in 5%. That’s an 80% match! This is before the funds are put to work in any type of markets as long-term investments. If you don’t have access to employer-sponsored plans like 401ks or 403bs, then almost everyone has access to Individual Retirement Accounts (IRA). There are two types: the Roth IRA is typically beneficial for those in lower income tax brackets who believe they will be in a higher tax bracket during retirement; and the traditional IRA that can benefit those currently in a higher tax bracket, so they can deduct contributions now, while they are in a higher bracket, and then withdraw it during retirement, when they are in a lower one.

My opinion is that both the business and economic environments may be on the cusp of a very long-term expansionary period. Obviously, there will be economic recessions in the future; but, the one consolation prize that we may get due to this current, crazy administration, could be a very positive tailwind for the business community. Owners of things could well benefit from this administration’s policies. We need to seriously consider paying ourselves first to ensure that we don’t miss the boat. If you need help finding a starting place, consult with a financial advisor who can help you get on the right path.


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