Tag Archives: taxes

Insurers Cautiously Optimistic on Trump

The President-Elect, Donald Trump stated on his campaign trail that he would lower corporate income taxes. Furthermore, he would lessen regulations giving insurers reasons to be optimistic.

Trumps’s style of governing

Chris Swift, CEO of The Hartford indicated that Trump’s governing style may be comparable to that of Ronald Reagan (Reaganomics). Ronald Reagan, the 40th President of the United States, based his domestic governing method on supply-side economics.

  • Reducing marginal tax rates on income from labor and capital
  • Reducing the growth of government spending

By implementing supply-side economics the political and theoretical foundation was laid for a significant number of tax cuts in the United States.

An individual’s marginal tax estimate is the tax rate he pays. This on an additional dollar of earnings. Insurers are cautiously optimistic on Trump’s policy. As a result it determines the breakdown between taxes, on the one hand, and funds available for own use on the other hand. This is the core of supply-side analysis.

Supply-side analysis directly affects the motivation of citizens. Citizens are motivated to be productive, to save and invest.

The Obama Administration enacted the Dodd-Frank Act in July 2010. This Act offers protection for the consumer. Its main purpose is to avert another major financial crisis. It will take effect in April 2017. Its main premise is that regarding retirement savings, insurers must put their clients’ interests first. As a result, this may slow down the sales of variable annuities.

Donald Trump’s choice for Treasury Secretary – Steven Mnuchin – stated that he would focus on rolling back parts of the landmark Dodd-Frank financial overhaul law enacted in the wake of the financial crisis of 2008. He said that Dodd-Frank was way too complicated and cuts back lending. Trump said that he would like to repeal the Dodd-Frank Act. The banking system has also been shouting out for the repeal of this act.

Variable Annuities

A variable annuity is a contract between you and insurers, under which the insurance company agrees to make periodic payments to you. This could be immediately or at some future date. The manner in which you purchase a variable annuity is either by making one single contribution or a series of purchase payments.

The Typical American Couple

When American companies began switching from traditional pensions to self-directed 402 (k) – like plans in the 1980s and 1990s, it was supposed to lead to a golden age of insured retirement security.

No longer would workers be at the mercy of the company’s generosity. The solvency of Social Security would not be of importance. Workers themselves would be responsible for saving enough for a comfortable retirement.

Thirty years later, the results are in. The median working age couple has saved only $5000 for their retirement, according to analysis of the Federal Reserve’s 2013 Survey of Consumer Finances. The do-it-yourself pension system is a disaster. Seventy per cent of couples have less than $50 000 saved.

Even those on the cusp of retirement- the median couple in their late 50s or early 60s has saved only $17 000 in a retirement savings account.