Many Americans fear that the results of the 2024 presidential election will have a bigger impact on their retirement plans than market performance, demonstrating how politics and investing are becoming more intertwined, according to a new survey from the Nationwide Retirement Institute.

“We see more and more political polarization in the country,” said Eric Henderson, president of Nationwide Financial’s annuity business. “People are passionate on both sides, but when it comes to market conditions, especially stock market conditions, historically it really has had very minimal impact on the equity markets.” 

Nationwide’s ninth annual “Advisor Authority” study polled 2,404 investors and found that 45% said the election will affect their retirement plans more than market performance.

Regardless of political affiliation, investors believe that the economy is heading for financial peril if the party they are less affiliated with takes up residency at 1600 Pennsylvania Avenue, the study found. 

For instance, 32% of investors said that should the party they associate with less win the presidency next November, the country will then plunge into a recession within 12 months. In addition, 31% said such an election outcome would hurt their future finances, while another 31% believe their taxes would increase within a year.

In most instances, an investor would expect to go to their advisor to provide nonpartisan advice. However, advisors are not above the political fray and are prone to political influence as much as their clients. 

In the survey, which questioned 507 advisors, 38% anticipated a volatile stock market in the next 12 months if the party they align with less wins the election next year. But advisors should concentrate on the facts and not be swayed by their political leanings, according to Henderson.

“Advisors, especially those who have been in the business for a while, have a lot more data at their hands,” he said. “They have a lot more access to information, and it’s their job to look at this information.” 

Despite their political beliefs and predictions on the economy, many advisors are not allowing it to influence their advice to clients. More than half, or 56%, said their best advice is to stay the course during an election year. 

“We look at things,” Henderson said advisors should tell their clients. “We don’t make major shifts unless there’s a strong reason to, and a presidential election is not a strong reason to make a shift.”

Separating politics from decisions can be difficult. It can be even harder if the advisor and client have two different political ideologies. It is up to the advisor to disregard their personal politics and focus on the data, according to Henderson.

“Politics seems to be infused into more and more areas of life, but ultimately the advisor needs to be that professional and say, ‘Regardless of my political persuasion or your political persuasion, we’re looking at what’s the best thing for your retirement security [so] we can make sure that you’re good,’” he said.

While a portion of Americans do believe that the outcome of next year’s election will affect their retirement plans, Republican investors believe it more: 68% said the outcome of the presidential election will have a direct, immediate and lasting impact on the performance of the stock market. Meanwhile, 57% of Democrat investors believe the election will have an impact.

However, investors who are political independents are the least concerned, as only 40% said the results of next year’s election will have a bigger impact on their retirement plans and portfolios than market volatility.

Inflation continues to be a concern for all investors regardless of their political affiliation. Forty-seven percent of non-retirees identified it as the greatest long-term challenge to their retirement portfolios. Meanwhile, 42% said it was the increased cost of living, and 31% said it was a potential recession.

“[Higher inflation] has more of a direct impact on [investors] than equity markets do, and so I think in the back of their mind, they don’t feel in as good of an economic situation as they have in the past,” Henderson said. “I think that spills over to a lot of other parts of the economy.”

Given the insecurity of the markets, those nearing retirement are the most concerned about their potential nest egg getting hurt as a result of inflation and the impact that next year’s election could have on it. To contend with that, 33% of pre-retirees surveyed said they plan to invest more conservatively in preparation for next year’s election compared with 31% of non-retired investors.

In contrast, 12% of pre-retirees and 4% of retired investors will invest more aggressively in anticipation of next year’s election.

“When you think about retirement, that is a long-term situation,” Henderson said. “You have to think about it as a long-term situation and not something that any short-term thing is going to have a significant impact on typically.”