President Joe Biden got the most attention Tuesday for what he said during his State of the Union address about the Russian war against Ukraine.
1. The Russia-Ukraine War
Some observers, including former U.S. Defense Secretary William Cohen, have suggested that the conflict could lead to the kind of nuclear war that would end the current form of human civilization.
The current, limited conflict has already increased turmoil in world financial markets and given support to agents and advisors who have encouraged clients to use non-variable annuities, universal life insurance, direct investments in bonds and other products designed to buffer the holder against volatility.
In the medium term, the conflict could lead to enormous retirement planning complications for Russian citizen clients who live in the United States, U.S. citizen clients who live in Russia, Ukraine or other affected jurisdictions, and any U.S. citizen clients, anywhere in the world, who are married to spouses from Russia or other affected jurisdictions who are not U.S. citizens.
Sanctions imposed on Russian banks mean that clients may have trouble with everything from paying routine bills to getting the information needed to file tax returns.
In some cases, couples may have to cope with the financial considerations associated with moving suddenly, and unexpectedly, from one jurisdiction to another.
Clients who had planned to rely mainly on accounts in Russia to pay to retire there may suddenly have to look at what resources might be available to help them for retirement elsewhere.
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2. Taxes
The U.S. federal government was already facing the need to deal with the increase in budget deficits and the national debt that occurred as a result of the battle against COVID-19.
Concerns about national security may increase pressure on the federal government to seek new sources of revenue.
Biden asserted in his address that, "The one thing all Americans agree on is that the tax system is not fair."
"I'm not looking to punish anyone," Biden said. "But let's make sure corporations and the wealthiest Americans start paying their fair share. Just last year, 55 Fortune 500 corporations earned $40 billion in profits and paid zero dollars in federal income tax. That's simply not fair. That's why I've proposed a 15% minimum tax rate for corporations."
Any new taxes could reduce life insurers' and public companies' profits, hurting personal portfolio yields and availability of some types of income guarantees.
But any new taxes could also help sales of some products. In the past, for example, federal estate taxes were higher, and many families used life insurance to manage estate tax obligations.
The nature of any planning and sales opportunities created by new federal "revenue raisers" would depend on tax code change details.
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3. Price Controls
Biden contended that prices have been going up because of "capitalism" and "exploitation."
"When corporations don't have to compete, their profits go up, your prices go up, and small businesses and family farmers and ranchers go under," Biden said. "We see it happening with ocean carriers moving goods in and out of America. During the pandemic, these foreign-owned companies raised prices by as much as 1,000% and made record profits. Tonight, I'm announcing a crackdown on these companies overcharging American businesses and consumers."
Successful administration efforts to break up monopolies and other forms of exploitation could help retirement planning clients, by lowering inflation.
Poorly designed efforts to fight real inflationary economic forces could lead to shortages of some goods and services that clients use and gluts of others, forcing clients to focus at least some of time they could be spending on income planning to arbitraging between price-controlled markets and free markets.
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