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ValueAct Capital began buying Disney this summer during the Hollywood strikes and it is now one of the investor’s largest positions, the Activist Spotlight has learned.
The activist has been in dialogue with Disney’s management and is still growing their position, according to the Activist Spotlight.
ValueAct believes that Disney’s theme parks and consumer products businesses are alone worth low $80s per share.

Disney CEO Bob Iger speaking with CNBC’s David Faber at the Allen&Co. Annual Conference in Sun Valley, Idaho.
David A. Grogan | CNBC

ValueAct Capital has taken a significant stake in Disney (DIS) and has been in dialogue with Disney’s management, the Activist Spotlight has learned. This is a new stake not previously disclosed in filings or media reports.
Here’s a breakdown of the situation:

Company: Walt Disney Co.

Business: Disney is one of the most iconic entertainment companies globally. It operates through two segments, Disney Media and Entertainment Distribution; and Disney Parks, Experiences and Products. Disney engages in film and TV content production and distribution activities, as well as operates television broadcast networks and studios.
Stock Market Value: $167 Billion ($91.07 a share)

Activist: ValueAct Capital

Percentage Ownership: n/a
Average Cost: low $80s per share
Activist Commentary: ValueAct has been a premier corporate governance investor for over 20 years. ValueAct principals are generally on the boards of half of ValueAct’s core portfolio positions and have had 56 public company board seats over 23 years. ValueAct has filed 89 13D’s in their history and has had an average return of 57.57% versus 17.52% for the S&P 500 over the same period.

Behind the scenes:

ValueAct knows technology very well as seen by their active investments at Salesforce, Microsoft, and Adobe where they had board seats. They also know media well as active investors at the New York Times, Spotify and 21st Century Fox.
ValueAct began buying Disney this summer during the WGA and SAG strikes and it is one of the firm’s largest positions. The activist investor has been in dialogue with Disney’s management and are still growing their position today.
ValueAct believes that Disney’s theme parks and consumer products businesses and their $10 billion in EBIT (earnings before interest and taxes) are alone worth low $80s per share, ValueAct’s approximate cost basis in the stock.
The theme parks unit has a high return on capital, allowing Disney to further monetize its intellectual property. Amongst its peers like Warner Bros, Paramount and Netflix, Disney is the only one who has this advantage. Moreover, this is a business that is not threatened by technology, but enhanced by it.
For example, Disney’s Genie app, which allows park visitors to be guided through the parks in a way that minimizes their wait time, greatly enhances the visitor experience. Moreover, Disney has recently announced that it will be investing $60 billion into theme parks, which will be money well spent.

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Disney YTD

This theme park valuation implies an almost zero valuation for the rest of Disney’s business that includes ESPN, theatrical movie releases, Disney+, Hulu and its television networks. Like digital news and music, video streaming was greatly disrupted by the internet and the low cost of capital from 2016 to 2021 afforded streaming companies, almost unlimited capital to acquire customers at any cost. Then with rising interest rates and inflation, that bubble burst in 2022 and there was a massive re-rating of assets globally.
Many of the high-growth companies that had easy access to capital now find themselves the most capital constrained they had been in a long time. This gives a huge advantage to companies like Disney, which has a market leading brand and an incumbent business model with strong customer relations.
Now, these streaming wars are in the process of resolving and companies are focused more on profitability than acquiring customers at any cost. This means cutting costs and creating growing and sustainable revenue.
ValueAct has experience in both of these areas. At Salesforce, where ValueAct CIO Mason Morfit is on the board, margins have gone from 18% to 32% while the stock has gone from $130 to $220 in 10 months. Disney has already announced an aggressive cost cutting plan, but it is the revenue opportunity that is more interesting here.
At portfolio companies like Adobe, Microsoft, Salesforce, Spotify and the New York Times, ValueAct has advocated for and assisted in creating bundles, pricing tiers and advertising stacks that have led to less churn, more pricing power, higher average revenue per user and even better advertising technology.
Both the New York Times and Spotify increased their bundles (NYT with Wordle, the Athletic, etc.; Spotify with podcasting and audiobooks) and both increased subscription pricing. The New York Times’ stock went from $30 per share to $45 per share and Spotify went from approximately $80 per share to $175 per share. Disney has numerous opportunities for bundling, price tiers, etc. and there are many ways this can work out through its present assets, M&A, alliances and licensing, but intelligently bundling its products will lead to more stable and valuable revenue. Based on similar situations that ValueAct has been involved in, this could lead to up to $15 billion of EBIT for the media assets and a Disney stock price as high as $190 per share.
ValueAct has a history of creating value through board seats, including at Salesforce and Microsoft, but has also added value as active shareholders in situations like Spotify and the New York Times.
I would expect that they would want a board seat here and as someone who has a reputation of working amicably and constructively with boards, the Disney board should welcome them with open arms. Aside from their extensive experience at technology companies and media companies and their innovative and relevant history of growing sustainable revenue at similar companies, there is one other reason shareholders should welcome them to the board.
Bob Iger returned to Disney in 2022 with an initial two-year contract with the explicit goal of righting the ship. The board formed a succession planning committee at that time. Iger subsequently extended his employment agreement through 2026 but longer-term succession remains one of the board’s most important priorities. Having a shareholder representative on the board is very helpful in that area particularly one like ValueAct, whose CIO participated in one of the most audacious and successful CEO successions ever when Satya Nadella replaced Steve Ballmer as CEO of Microsoft. Someone with that experience and perspective would be invaluable in navigating CEO succession at Disney.
Finally, we cannot ignore the fact that Disney is presently the target of a proxy fight by Nelson Peltz and Trian Partners that is turning somewhat confrontational. This certainly gives the Disney board an alternative they were not expecting.
Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments. More

“I don’t think we’re facing the next GFC,” Jonathan Pingle, UBS chief U.S. economist told CNBC on Wednesday.
Credit tightening in the U.S. has raised concerns about the state of the economy and what could happen next.
UBS said earlier this week that it anticipated a mild recession, as well as significant interest rate cuts next year.

Despite indicators like U.S. credit card debt pointing toward financial and economic pressures, another global financial crash is not imminent, UBS chief U.S. economist Jonathan Pingle believes.
U.S. credit card debt soared to $1.08 trillion in the third quarter of 2023, data from the Federal Reserve Bank of New York showed earlier this month. This has sparked concerns about what rising debt levels, brought on at least in parts by higher prices, could mean for the overall economy.

However, Pingle told CNBC’s Joumanna Bercetche on Wednesday that it is difficult to view the data as a systemic risk.
“I don’t think we’re facing the next GFC [global financial crisis],” he said on the sidelines of the UBS European Conference.
Credit tightening does play a role when it comes to the lag of Federal Reserve monetary policy filtering through to the economy, Pingle suggested. “We are still waiting to see those credit headwinds dampen activity in 2024,” he said.
Credit tightening tends to precede loan growth by several quarters, so the full impact is not yet clear, he explained.

Several other factors also come into play, Pingle noted. This includes concerns about regulation in the wake of the collapse of Silicon Valley Bank, which raised alarms about the health and stability of the banking sector and prompted a crisis in regional banking, and “rapid” interest rate hikes, he said.

The Federal Reserve began hiking interest rates in March 2022 in an effort to ease inflation and cool the economy. Eleven rate hikes have been implemented since then, with the target range for the fed funds rate rising from 0%-0.25% to 5.25%-5.5%.
The Fed chose to leave rates unchanged at both of its last two meetings, and Tuesday’s lower-than-expected reading of the October consumer price index prompted traders to all but erase the chances of rates being hiked at the central bank’s December meeting.
The CPI was flat compared to September and reflected a 3.2% rise on an annual basis, while the so-called core-CPI, which excludes food and energy prices, came in at 4% year over year. This marked the smallest rise since September 2021.
“It’s great news for the Federal Reserve in their quest to restore price stability,” Pingle told CNBC on Wednesday. Still, they are “not out of the woods yet” he added, saying that there was “still a ways to go” before the Fed reached its 2% inflation goal.
A trend of disinflation is however in place, Pingle said, and if the Fed can slow the economy, it could make strong progress toward its inflation goal.
“We think its probably going to get to 2 next year. It’s already falling faster than the Fed expects,” he said.
However the economy including the labor market will have to weaken further for inflation to steadily remain around 2%, Pingle expects.

“The path to two and a half we think is pretty clear, but sort of that last leg down we do think is going to take some weakening in the labor market,” he said.
In its 2024-2026 outlook for the U.S. economy, which was published Monday, UBS said it expected unemployment to rise close to 5% next year and for the economy to enter a mild recession. UBS is anticipating a contraction of the economy by around half a percentage point in mid-2024, its report suggested.
A looming recession has been a key fear among investors throughout the Fed’s rate-hiking cycle as many have been concerned about rates being hiked too high, too quickly.
They have therefore been hoping for an imminent end to rate hikes and hints about when the Fed may start cutting rates again.
UBS foresees significant rate cuts for 2024, predicting that rates could be cut by as many as 275 basis points throughout the year.
Rates would be cut “first to prevent the nominal funds rate from becoming increasingly restrictive as inflation falls, and later in the year to stem the economic weakening,” the Swiss bank said.
Rate cuts will therefore be a two-step process Pingle explained, and could start relatively early in the year.
“As early as March they should probably start at least calibrating the nominal funds rate,” he said, whereas the second stage would likely begin when unemployment starts rising. More

Year-end Planning

The IRS on Thursday released 2024 inflation adjustments for the capital gains tax brackets, which apply to investments owned for more than one year.
In 2024, single filers can earn up to $47,025 in taxable income — $94,050 for married couples filing jointly — and still pay 0% for long-term capital gains.
Taxable income is calculated by subtracting the greater of the standard or itemized deductions from your adjusted gross income.

Fg Trade | E+ | Getty Images

If you’re planning to sell investments or rebalance brokerage assets next year, it’s possible you won’t trigger a tax bill for 2024.
The IRS on Thursday released dozens of inflation adjustments for 2024, including increases in income tax brackets, standard deductions and income thresholds for capital gains.

For 2024, there are higher thresholds for the 0%, 15% and 20% long-term capital gains brackets, applying to assets owned for more than one year. 

More from Year-End Planning

Here’s a look at more coverage on what to do finance-wise as the end of the year approaches:

“It’s great from a tax planning perspective,” said Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida. “There’s definitely an opportunity to take some gains next year.”
If you’re in the 0% capital gains bracket, you can sell long-term assets or rebalance your taxable portfolio without adding to your tax liability, he said.

How to calculate your capital gains tax bracket

You’re more likely to fall into the 0% capital gains bracket in 2024 with higher standard deductions and capital gains income thresholds.
“A lot of people don’t realize,” Lucas said.

For 2024, you may qualify for the 0% long-term capital gains rate with taxable income of $47,025 or less for single filers and $94,050 or less for married couples filing jointly.
The standard deduction will rise to $29,200 in 2024 for married couples filing jointly, an increase from $27,700 in 2023, and single filers may claim $14,600, up from $13,850. The standard deduction is even higher if you’re at least age 65 or blind.

However, many investors don’t know that capital gains brackets use “taxable income,” which is calculated by subtracting the greater of the standard or itemized deductions from your adjusted gross income.
“It’s really quite a bit of capital gains you can receive without paying any tax,” said certified public accountant Tom Wheelwright, CEO of WealthAbility.  
For example, if a married couple earns $125,000 together in 2024, their taxable income may fall below $94,050 after they subtract the $29,200 standard deduction for married couples filing jointly.

Who may fall into the 0% capital gains bracket

There are several scenarios where higher earners may unknowingly fall into the 0% capital gains bracket for 2024, experts say.
For example, retirees who haven’t started collecting Social Security income or required minimum distributions “absolutely should be looking at this,” Wheelwright said, noting that $94,050 of taxable income is a “pretty big number.”
You may also fall into the 0% capital gains bracket if you experienced a job loss or lower revenue as a business owner. More

Many individuals find it difficult to save for retirement because of their financial circumstances.
It turns out that whether or not you have a combination of certain behavioral traits can also make or break your investment goals, new research finds.

Thomas Barwick | Stone | Getty Images

People who find it easiest to financially prepare for retirement have four behavioral traits, a new survey shows.
Yet just 10% of workers have all of these “optimal” characteristics, according to the survey findings, from Goldman Sachs Asset Management in collaboration with Syntoniq, a behavioral finance research organization.

The behaviors help retirement savers turn their intentions into action, according to the July survey of 5,261 workers and retirees.
Many people find it difficult to save for retirement because of their financial circumstances.
Previous Goldman Sachs research has found competing life priorities — such as the need to pay down student loans, provide care for other family members or other financial hardships — may reduce workers’ retirement savings by up to 37%.
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High inflation and low savings has led Americans’ confidence that they can live comfortably in retirement to plummet, research from the Employee Benefit Research Institute and Greenwald Research found earlier this year.

“We know that people struggle with saving, we know that people have day-to-day financial issues,” said Chris Ceder, senior retirement strategist at Goldman Sachs Asset Management.
“We still wanted to know more about the why,” he said.
The research led to the discovery of the four traits, which are “not inherently things that you would think about for retirement,” Ceder said.

1. Overoptimism

When it comes to retirement planning, workers may want to take a cue from Warren Buffett, who always has a positive outlook for the country and future results, Ceder noted.
The research found a general tendency of overestimating the probability of positive events coupled with overconfidence — or having a perception that is better than reality — can help improve retirement preparedness.
“When you have that level of optimism, you’re comfortable taking the steps in order to achieve the goals that you have in the future,” Ceder said.
People who exhibit this trait have a higher level of financial engagement, willingness to take risk and plan for emergencies, the research found.

2. Future orientation

How well people connect with their future selves also impacts retirement preparedness.
Those who have this trait are more likely to have smart spending, saving and money management skills, the research found.
“In order to save for something, you have to understand where you’re going,” Ceder said.

3. Financial literacy

Having financial know-how — such as how compound interest and diversification works — can help workers better reach their retirement goals.
The good news is people can acquire this knowledge.
“Financial literacy is something that kind of grows over time,” Ceder said.
However, the earlier you have this knowledge, the better the financial decisions you will make, which will help you get ahead when it comes to retirement preparedness, he said.

4. Risk vs. reward

Retirement savers may fall into one of two camps: those who pursue goals with a focus on achievement, or those who instead focus on security and protection.
Those in the first group are more likely to take proactive steps with financial preparation, including having a personalized financial plan and reviewing retirement savings.
They are also more willing to lean into risks. Having the opposite mentality of risk avoidance is not nearly as effective for reaching those retirement goals, Ceder said.

What investors can do

As aspiring retirees juggle competing life priorities, much of what it takes to be successful comes down to balancing today’s lifestyle with future goals.
“People who are disciplined with their money, disciplined with their life, really are going to go so much further,” John Merrill, president and founder of Tanglewood Total Wealth Management in Houston, recently told CNBC.com.
Mental health also affects workers’ abilities to plan adequately for retirement, research has found.
To better prepare for retirement, workers should remind themselves that the future may be “equally as interesting and bright” as today, Ceder said.
While developing all four traits identified in the research is important, two traits — optimism and future orientation — should be a priority, Ceder said.
The results found 5% of workers had all four suboptimal traits identified by the research — low optimism, low future orientation, low financial literacy and risk focus.
Most workers — 85% — have a blend of these traits and mixed retirement savings success. More

Year-end Planning

People often contribute to charitable organizations during holiday season.
Donating a used car may help a driver in need, especially as auto costs are so high.
However, don’t expect the move to immediately make a huge difference in your tax deductions, experts say. 

Person holding car key.
Manusapon Kasosod | Moment | Getty Images

Donating your used car to a charity may bring you joy for helping another person in need, especially as prices for both new and used cars remain high.
However, don’t expect the move to make a huge difference in your taxes, experts say. 

That’s because charitable contributions are claimed as itemized deductions on Schedule A — and most taxpayers don’t itemize.
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“Before you’re even talking about charitable gifting even making any sense,” a married couple must have more than $27,700 — their standard IRS deduction for 2023 — in itemized deductions, said certified financial planner Tommy Lucas, an enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida.
Those might include charitable gifting, as well as real estate and property taxes, mortgage interest, medical expenses exceeding 7.5% of adjusted gross income and other qualifying expenses.
“Your average everyday American is not spending $30,000 on those items,” Lucas said.

What a donated car is worth on your taxes

When you donate a car, your tax deduction is typically the price the charity sold it for; however, you can claim the fair market value of the car in select circumstances, such as if the charity uses the vehicle for its own purposes.
“If you donate a $2,000 car and the charity takes it to auction and it’s worth $1,500, then you would only be able to claim $1,500 as an itemized charitable contribution,” he said.
Additionally, the value of non-cash charitable contributions is limited to 50% of your adjusted gross income, which can be a “real hassle” if you’re donating a newer used car, which are “valuable right now,” he said.

How to claim a car donation at tax time

If you donate a used car that is worth more than $5,000, IRS rules require a written appraisal for the vehicle, said Albert J. Campo, a certified public accountant and founding partner of AJC Accounting Services in Manalapan, New Jersey. That paperwork may come at an additional service cost, he said.
After you make the donation, the charity has to file Form 1098-C to the IRS, which is a written acknowledgement that they received the car, what the fair market value was and what they sold the car for, said Lucas. They will provide a copy to the donor.
The donor must include the 1098-C when they file their individual tax return, and detail the donation on Schedule A.
If you made more than $5,000 in non-cash charitable contributions, you’ll also fill out Form 8283, Lucas said.

‘Take the cash and donate it’

On the other hand, taxpayers can always sell the vehicle and use some or all of the proceeds to make a charitable gift.
“You could just as easily sell it, take the cash and donate it. That would be easier,” Lucas said. 
That can mean you get a greater value for the donation, because private sales are likely to be for higher amounts than a car might fetch at auction. Additionally, with cash donations, the deduction limit is up to 60% of annual gross income, he said.
Even if you don’t see a tax benefit, you relieve the charity of the effort and expense of repairing and selling the car. 

How to vet a nonprofit for a car donation

If you plan to donate a car, make sure the organization is a 501(c)(3) organization, Campo explained. The IRS has its own database where you can search registered nonprofit organizations.
To vet the charity’s integrity and mission, talk to the people at the organization, learn what their plans and goals are. Finally, see if the charity specializes in “selling cars at auction for top dollar,” or if they would be able to sell it for more than you could, Lucas said.

If you have a car that is maybe worth $5,000, see if they could get that amount at auction. If they can’t, you might be able to help the charity more by selling the car for $4,000 and “just give the cash at that point,” he added. More

Nearly three-quarters of aspiring homebuyers say affordability is the No. 1 obstacle to owning a home.
In today’s market, “nepo-homebuyers” are tapping family money to afford their down payment.
However, there are other options for would-be buyers who are struggling to come up with a 20% down payment.

A “For Sale” sign in Arlington, Virginia, on Aug. 22, 2023.
Andrew Caballero-Reynolds | AFP | Getty Images

Fewer people can afford to buy a house these days.
On top of soaring home prices, 30-year fixed mortgage rates have been hovering near the highest level in more than two decades.

“U.S. home prices are near record highs, and mortgage rates have rocketed to their loftiest levels since 2000,” said Bankrate analyst Jeff Ostrowski. “For today’s would-be homebuyers, times are decidedly tough. They face limited choices and an affordability squeeze.” 
For some buyers, that leaves just one option: asking their parents for help.

Buyers turn to the bank of mom and dad

“First-time buyers cobble together down payment sources from at least two places,” Zillow’s chief economist Skylar Olsen recently said on CNBC’s “Last Call.”
“Some of that is hard-won savings,” she said. “The other part is, say, a gift from family and friends.”
In fact, roughly 40% tap the bank of mom and dad, up from only one-third pre-pandemic, Zillow found. “That’s a pretty privileged network,” Olsen added. 

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Would-be homebuyers need a salary of $114,627 to afford a median-priced house in the U.S., according to another report by real estate site Redfin, a particularly high bar for those just starting out.
To bridge the gap, a growing share of younger house hunters are now considered “nepo-homebuyers,” because they rely on family money to complete their purchase, the Redfin report said.
Nearly 40% of recent homebuyers under age 30 used either a cash gift from a family member or an inheritance to afford their down payment, Redfin also found.

Home affordability is a growing problem

Despite being the hallmark of the American Dream, close to three-fourths of would-be homeowners said affordability is their greatest obstacle, a recent report by Bankrate found.
In fact, housing is far less affordable today than in any time in recent history, several studies show.

Over the past 35 years, the payment-to-income ratio — a commonly used measure of the share of median income it takes to make the monthly principal and interest payment on the median home with a 30-year mortgage and 20% down — has averaged less than 25%, according to data from ICE Mortgage Technology.
At its peak in 2006 before the crash, the payment-to-income ratio was 34%. In late 2023, the payment-to-income ratio is 40%.

‘A down payment isn’t everything’

Often, it’s the down payment that seems particularly daunting.
However, there are options, noted LendingTree’s senior economist Jacob Channel. “Though they are important, buyers should remember that a down payment isn’t everything, and, even if you don’t have tens of thousands of dollars you can put toward one, that doesn’t mean that you won’t be able to buy a house.”
While a 20% down payment is still considered the standard, the federal government, states, banks and credit unions all offer programs with much lower down payment requirements, or even none at all.
“Keep in mind that many lenders and specific loan options, like FHA mortgages, don’t necessarily require particularly large down payments,” Channel said.
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The looming 2024 election has prompted fears that market volatility may hurt retirement savings.
Meanwhile, candidates are debating changes to Social Security, the bedrock of retirees’ incomes.
Here’s what experts say to do if you’re worried about your retirement nest egg.

Peopleimages | Istock | Getty Images

For many Americans, planning for retirement may feel like a daunting financial goal.
Now, there’s another risk on the horizon that may stoke their worries — the 2024 elections.

Almost half of investors — 45% — surveyed by Nationwide Retirement Institute believe next year’s presidential and congressional contests will have a greater impact on their retirement plans and portfolios than market performance.
More than two-thirds — 68% — of Republican investors believe the election outcome will have a direct and lasting impact on the stock market, versus more than half — 57% — of Democratic investors.
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The online survey, which was conducted in August, included 2,404 investors ages 18 and up, as well as 507 financial advisors and other professionals.
The results also showed respondents believe the stakes are high for the economy, with nearly 1 in 3 respondents — 32% — believing the economy will fall into a recession if the party they do not support wins.

Older investors are most fearful because of the lasting impact a recession may have on their retirement. Pre-retirees ages 55 to 65 are more concerned about an economic downturn and inflation, the results found. And, one-third, or 33%, of that cohort are managing their investments more conservatively ahead of the 2024 election, compared to 31% of non-retirees.  

“As elections approach, people tend to overestimate the impact of elections on what they think the equity markets are going to do,” said Eric Henderson, president of Nationwide Annuity.
“As we think about saving and preparing for retirement, that’s obviously a much longer-term outlook,” Henderson said. “Historically, presidents don’t have a significant impact for the long term on equity markets.”

Social Security on the ballot in 2024

While it remains to be seen just how much the election will affect markets, the 2024 election is poised to have an impact on Social Security, which replaces about 40% of Americans’ pre-retirement income on average.
The trust funds on which Social Security relies to help pay benefits are projected to run out in 2034, at which point 80% of benefits will be payable.
Leaders elected next year will likely have a say on any adjustments made ahead of that depletion date.

The news cycle, in particular, is noise and that heightens anxiety.

Preston Cherry
president of Concurrent Financial Planning

Former President Donald Trump, who is in the lead in Republican polls, has vowed to leave entitlements like Social Security and Medicare untouched.
Florida Governor Ron DeSantis, who is second in GOP primary polling, said during this week’s Republican debate that his message to seniors who currently collect benefits is, “Promise made, promise kept.”
However, it is possible future beneficiaries may see changes.
Republican candidates were divided on whether to raise the retirement age. Meanwhile, former New Jersey Governor Chris Christie suggested the wealthy should not take benefits they do not need.
What moves experts recommend
Financial advisors also believe the election may have consequences for the markets, Nationwide’s survey found. While 46% of those polled said they see inflation as the biggest challenge to retirement portfolios, 38% said they expect the stock market to be volatile for 12 months after the election if the party they do not side with wins.
More than half of advisors — 56% — said they think staying the course is best when it comes to investing in an election year. Yet almost all — 96% — are implementing strategies aimed at protecting clients from market risk.
The top strategies they are using includes buying annuities; diversifying and focusing on non-correlated assets; and using more liquid investments like mutual funds and ETFs.
“If someone has a good plan, the main thing is to stay the course,” Henderson said.

If you don’t know what you plan is, it is a good idea to meet with a financial advisor to come up with one, he said.
Research shows investment returns tend to average out, regardless of which party is in the White House, noted Preston Cherry, a certified financial planner and founder and president of Concurrent Financial Planning in Green Bay, Wisconsin. Cherry is also a member of the CNBC Advisor Council.
“The noise of elections … the news cycle in particular is noise and that heightens anxiety,” Cherry said. “I would suggest for people to not let noise have an overwhelming impact on their emotions and decisions and to be more informed on the information that matters to their own households.”
While some retirees may be tempted to claim Social Security benefits early due to the program’s future uncertainty, experts still say it’s still generally best to wait to claim, if possible. More

Workers may have jobs where they pay into Social Security or earn pension benefits.
When they have both, their Social Security benefits may be adjusted to reflect that.
There’s growing support in Congress to either revise those rules or eliminate them altogether.

Araya Doheny | Getty Images

When Dave Bernstein, 87, started working at the U.S. Postal Service in February 1970, he was making $2.35 an hour.
To supplement his income, he also took on other work. Years later, Bernstein decided in 1992 to take a voluntary retirement.

“We knew there was going to be a reduced pension because of the early out,” said Phyllis Bernstein, Dave’s wife, who is 84.
But what came next was something the couple did not expect.
While Dave was expecting a monthly Social Security check of around $800, it ended up being just about half that amount – around $415 – even though he had earned the required 40 credits to be fully insured by the program. The benefits were adjusted based on rules for workers who earn both pension and Social Security benefits.
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The couple, who reside in Tampa, Florida, have had a different retirement than they envisioned due to the lower income.

Phyllis kept working until she was 82. They have also turned to family for financial support.
Their lifestyle is frugal, with home-cooked meals and cars they kept for 20 years, or “until the wheels were falling off,” the couple jokes.
But their limited resources have made traveling to Australia and New Zealand – Phyllis’ dream – out of reach.
“When he retired, I was working,” Phyllis said. “We just couldn’t do the travel.”
Today, Dave is pushing for the Social Security rules that reduced his benefits to be changed.

His union, the American Postal Workers Union, has endorsed the Social Security Fairness Act, a bill proposed in Congress that would repeal Social Security rules known as the Windfall Elimination Provision, or WEP, and Government Pension Offset, or GPO, that reduce benefits for workers had positions where they did not pay Social Security taxes, also called non-covered earnings.
The legislation has support from other organizations that represent public workers, including teachers, firefighters and police.
The bill has overwhelming bipartisan support in the House of Representatives – 300 co-sponsors – at a time when that chamber has been politically divided. That support recently prompted House lawmakers to send a letter to leaders of the Ways and Means Committee to request a hearing.
The Social Security Fairness Act has also been introduced in the Senate, with support from 49 leaders from both sides of the aisle.
Yet some experts say just getting rid of the rules may not be the most effective way of making the system fairer.

How the WEP, GPO rules work

The WEP applies to how retirement or disability benefits are calculated if a worker earned a retirement or disability pension from an employer who did not withhold Social Security taxes and qualifies for Social Security from work in other jobs where they did pay taxes into the program.
Social Security benefits are calculated using a worker’s average indexed monthly earnings, and then using a formula to calculate a worker’s basic benefit amount. For workers affected by the WEP, part of the replacement rate for the average indexed monthly earnings is brought down to 40% from 90%.
The GPO, meanwhile, reduces benefits for spouses and widows or widowers of recipients of retirement or disability pensions from local, state or federal governments.

It affects hundreds of thousands, if not millions of public employees that paid into Social Security and essentially are being penalized because they also happen to be public servants.

Edward Kelly
general president of the International Association of Fire Fighters

Under the GPO, Social Security benefits are reduced by two-thirds of the government pension. If two-thirds of the government pension is more than the Social Security benefit, the Social Security benefit may be zero.
The impact of the rules is far reaching, according to Edward Kelly, general president of the International Association of Fire Fighters. Many firefighters work in second jobs in the private sector as cab drivers, bar tenders or truck drivers, where they earn credits toward Social Security.
“They steal their money, because they’re also public employees,” said Kelly, who describes his union members as “passionately angry” about the issue.
“It affects hundreds of thousands, if not millions of public employees that paid into Social Security and essentially are being penalized because they also happen to be public servants, whether they are teachers, cops and, obviously, firefighters,” Kelly said.

Why experts say another fix may be better

The WEP and GPO rules were intended to make it so workers who pay Social Security taxes for their entire careers are treated the same as those who do not.
But under those current rules, some beneficiaries receive lower benefits than they would have if they paid into Social Security for all of their careers, while others receive higher benefits, according to the Bipartisan Policy Center.
Yet repealing the WEP and GPO rules would result in Social Security benefits that are “overly generous” for non-covered workers, research has found.
Part of what may create that advantage is that Social Security benefits are progressive, and therefore replace a larger share of income for lower earners. So someone who only has part of their salary history in Social Security may get a higher replacement rate without considering their pension income.

Fully repealing the WEP and GPO rules may also come with higher costs at a time when the program facing a funding shortfall. The change would add an estimated $150 billion to the program’s costs in the next 10 years, according to the Center on Budget and Policy Priorities.
Another way of handling the disparity may be to create a proportional approach to income replacement. Instead of the WEP, workers’ benefits would be calculated based on all of their earnings and then adjusted to reflect the share of their careers that were in jobs covered by Social Security. A similar approach may be taken with the GPO.
Certain bills on Capitol Hill propose a proportional approach.
However, a proportional formula may not solve all the inequities in the current system, according to Emerson Sprick, senior economic analyst at the Bipartisan Policy Center, which has prompted to think tank to work on refining its proposal.

‘Extremely complex’ to understand

An important advantage to reforming the current formulas would be making it easier for workers to understand and plan for their retirements.
“It is definitely extremely complex, and very hard for folks preparing for retirement or in retirement, to understand what it means for their benefits,” Sprick said.
Social Security statements that provide retirement benefit estimates do not take these rules into account.
Consequently, many workers find out their benefits are adjusted when they are about to retire.

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“The young guys don’t pay attention to it because it’s too far out; they’re not worried about it,” Kelly said of the firefighters.
“It’s not until you’re ready to go out the door that you actually start paying attention to what you’re going to have to live off when you actually retire,” he added.
The reductions to their Social Security benefits can be a shock.
For beneficiaries like the Bernsteins who start out with lower benefits, it can be difficult to catch up, even after a record 8.7% Social Security cost-of-living adjustmentw went into effect this year.
“Gas this summer and in the spring at $4 a gallon ate that money up like it wasn’t even there,” Dave Bernstein said. More