Don’t get drowned by the Blue Wave: Washington’s leftward lurch means it’s time to protect your wealth

Democrats took control of Congress last night in a historic blue wave election, and if the past is any indication of where they’re headed, the previous ten years of tax relief may be out the window.

In April this year, Senator Chris Van Hollen (D-MD) and U.S. Representative Don Beyer (D-VA) proposed the Millionaires Surtax Act to raise taxes on top-earning households by an additional 10 percent — a tax that extends to capital gains and investment income as well as wages.

Van Hollen also introduced the Strengthen Social Security by Taxing Dynastic Wealth Act that would reverse the estate tax changes introduced in 2017 with Trump’s Tax Cuts and Jobs Act by reducing the estate tax exemption to $3.5 million. Not to be outdone, Senators Patty Murray (D-WA) and Senator Ron Wyden (D-OR) introduced the Fair Trusts for Fiscal Responsibility Act in May that will close tax loopholes that shelter assets and defer or avoid estate taxes.

If you need any other evidence of which way the wind is blowing, look no further than the Make Billionaires Pay Their Fair Share Act sponsored by Senator Bernie Sanders (I-VT) and Representative Ro Khanna (D-CA) that proposes an annual 5% tax on billionaires’ net worth. Though the California referendum on a one-time billionaires’ tax failed by 22 points, it won’t be the last time that kind of tax is proposed. In fact, supporting more aggressive taxation of wealth might become a litmus test for Democratic presidential candidates in 2028.

There is also the possibility that Congressional gridlock will keep the government borrowing and spending, which could drive down the value of the dollar. Already, spot gold rose 3% to $4,046.91 in Wednesday’s early morning hours, and the dollar fell by nearly a full percentage point in the hours after the polls closed. 

What do you need to do today to protect your wealth?

If you have a substantial nest egg saved and you want to pass that to your family instead of the government, the time to take action is now. Look for temporary tax breaks like the $40,000 SALT deduction cap and the senior deduction to expire in 2030. The new Congress won’t be sworn in until January, and Trump will be able to veto legislation for the rest of his term, but it’s unlikely the tax-and-spend toothpaste will go back into the tube any time soon.

According to experts, the best move today is to get “hyper-tactical.” According to Henry Yoshida, CFP, CEO and Founder of Rocket Dollar, “For mass affluent and high net worth individuals, the next two years are a window to do Roth conversions and gifting while the existing rules are known.”

Tax-advantaged have certain limitations, including contribution limits to Roth IRAs. If your Modified Adjusted Gross Income (MAGI) is above the phase out limit (for 2026, equal to or greater than $168,000 for single filers or $252,000 for married filing jointly) you cannot make a direct contribution to a Roth. Many high earners get around this rule with a backdoor Roth conversion, but that is limited to the standard IRA contribution limit ($7,500 in 2026). If you have a workplace 401(k), however, you can contribute an extra $47,500 of tax-free money into a Roth IRA for 2026 using a mega-backdoor Roth conversion. 

When asked what people who are ten, five and one year out from retirement should do, Yoshida tells the post, “Ten years out, max out every tax-advantaged account and, if eligible, build your Roth bucket while rates are predictable. Five years out, start a cash reserve and run Roth conversions in low-income years. One year out, lock in your Social Security claiming plan and your first-year withdrawal plan.”

You’re invested in stocks and bonds, but is that enough?

Historical data shows that the U.S. stock market performs well during periods of divided government and frequently outpaces returns achieved under single-party control. Analysts attribute this to “political gridlock,” which minimizes the risk of sweeping legislative or tax overhauls, which means a predictable landscape for financial planning — both for corporations and individuals.

But what do you do if there is another financial crisis, like in 2008? Karen Dynan, a professor of the practice in Harvard Department of Economics and at HKS and a former Treasury official under President Obama, has said recently that “I think the first thing that you would see [if a financial crisis is unfolding] would be rising interest rates,” as was the case in September and October this year as Treasury rates spiked.

The next step is broad distress in financial markets. According to Dynan, “as interest rates rise, you’re going to see firms having the value of the assets they hold drop. That’s going to cause them to then deleverage themselves, try to reduce their debt, sell off assets further, which would cause further declines in asset prices.”

In a case like this, the value of precious metals as a hedge against crisis becomes clear. Historically, during the tail end of a recession the value of gold and silver climbs as investors loose faith in paper currency and equities. And other historical tailwinds may be at play for precious metals as central banks go on a gold buying spree and even move to repatriate their gold reserves held at the New York Federal Reserve bank.

A gold IRA rollover can move your tax-advantaged savings from stocks and bonds to physical gold without a tax hit. By shifting funds seamlessly from a standard 401(k) or traditional IRA into a self-directed account, you gain direct ownership of physical bullion and IRS-approved coins. This transition occurs entirely tax-free and penalty-free, ensuring your wealth is secure under a tax-deferred or Roth umbrella without triggering immediate capital gains liabilities.

The intrinsic value of gold is a traditional hedge against inflation and currency devaluation that can safeguard future purchasing power if the dollar slips. To protect your investment, IRS regulations mandate that your metals are housed in an approved, third-party depository. We have rounded up the best gold IRA companies that offer professional custody, which means your physical wealth remains fully insured and heavily secured, offering true peace of mind that digital assets simply cannot match.

The Blue Tsunami crashed on the country last night, but that doesn’t mean you have to get soaked. With a little planning, you can be like Noah, and ride out this shift in the historical tide.