Your portfolio and your retirement

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By Pat Regnier, Money Magazine assistant managing editor

With the stock market taking a dive, yanking millions of 401(k) plans down with it, many voters will be thinking about their nest eggs when they pull the lever in November. So who's likely to be best for your portfolio? There's no simple answer.

Like Bush, McCain would tilt the tax code in favor of asset ownership by keeping rates low on capital gains and dividends. His corporate tax cuts would also tend to benefit shareholders in U.S. companies.

"On the surface, McCain would seem to be better for the market, based on his policies," says Greg Valliere of the Stanford Group Company, which advises investors on political trends. "But most of those policies have been in place for the past few years."

The market has a lot on its mind besides tax rates: deficits, wars, energy, security and housing, to name just a few.

For a Democrat, Obama is still fairly investor-friendly. His top capital-gains rate of 20% remains well below the 28% of the Clinton era, and he wouldn't be taxing dividends at anywhere near the rate of ordinary income.

Obama would also like to bring new investors - the ones in the middle of the income spectrum - into the market. His saver's tax credit would give up to $500 to families earning less than $65,000 if they put money into an IRA or a 401(k).

He'd also try to make saving easier for everyone by taking advantage of people's laziness. He'd mandate that all companies offering 401(k)s sign up employees automatically - you'd have to choose to opt out of your plan rather than to opt in. Companies that didn't offer 401(k)s would have to offer automatic IRA contributions, deducted from workers' paychecks.

On Social Security, the candidates' views fall predictably along party lines. McCain likes the idea of creating private accounts. And he tends to see the solution to Social Security's long-term problems as a matter of cutting future benefits, not raising taxes.

He and the Democrats, who scored a big win beating back Bush's privatization initiative in 2005, just aren't going to see eye to eye on this. So a vote for McCain is probably a vote for the status quo as long as Democrats control Congress.

For Obama, the cure for Social Security is simply - you guessed it - higher taxes on the affluent. He's floated the idea of adding an extra dollop of payroll taxes for people earning more than $250,000. Obama hasn't nailed down how high those taxes would be or whether the bigger contributions would have any effect on benefit formulas.

Could he pass this? There's certainly a long tradition of tapping the wealthy to patch up Social Security. But he'd probably have to offer the Republicans some small benefit cuts too.

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