What to Watch for in 2019
2018 was, to put it mildly, an interesting year. For many, the year was a blend of the good, the bad, and the ugly. However, it’s all behind us and now is the time to look ahead to the next 12 months. So, what does 2019 have in store for us? Will it be another wild ride? Or will the dust from 2018 finally start to settle?
For the first Marketing Corner of 2019, we have a snapshot of just a few of the things agents and advisors should keep an eye on over the coming months.
From concerns over potential insolvency, threats to slash the program’s budget, and a COLA boost, Social Security dominated the headlines in 2018. That spotlight will likely remain affixed on the program this year.
While the 2.8% COLA boost means bigger payments in 2019, this will be the last year for the “restricted application strategy.” As it stands now, anyone at full retirement age (66) can restrict their application to spousal benefits only, which would see them collect those payments while letting their own benefit grow until they reach age 70. This strategy is only available for those born before January 2, 1954, meaning those turning 66 this year will be the last group of retirees who can take advantage of this strategy.
Advisors should also keep an eye on Washington D.C. this year as lawmakers are expected to push legislation aimed at improving and preserving the program. Most notably, the Social Security 2100 Act, which calls for a 2% across-the-board benefit increase, bigger annual COLA adjustment and higher minimum benefits for low-income workers. The expansion would be funded by lifting the cap on taxable wages and a gradual phase-in of higher payroll tax rates.
Retirement Savings Plans
This year will see the IRS raise the contribution limit for retirement saving plans, making it possible for workers to increase their nest egg. According to IRS.gov, these cost-of-living adjustments include increasing limits for 401(k), 403(b), most 457 plans and Thrift Savings Plans from $18,500 to $19,000 and annual IRA contributions increasing from $5,500 to $6,000.
These changes come as some states are starting programs that automatically sign up workers without employer-provided 401(k) or IRAs. These “auto-IRA” plans would require employers to set up automatic payroll deductions but won’t enforce matching contributions. Last year, Oregon became the first state to launch one of these programs, with California and Illinois expected to start theirs in 2019. Other states, Vermont, Maryland, Connecticut, are currently preparing programs, and New York and New Jersey are laying the groundwork for their own plans.
After 2018’s rollercoaster of tariffs, trade wars, rallies, and plunges, it’s difficult to predict exactly what 2019 has in store for Wall Street. While the word “recession” has been tossed around as of late, few experts believe things will reach that level. However, that’s no guarantee the market volatility we saw in recent months won’t carry over through 2019. This is why advisors should consider focusing on low-risk and/or recession-proof solutions when helping clients plan for retirement. Consumer confidence may still be high, but a shaky stock market could be a source of recency bias for many clients.
Also Of Interest…
The Security Exchange Commission is expected to move forward with the proposed “regulation best interest” standard this year. Of course, that means the government shutdown has to end so the SEC can reopen and get back to work.
After increasing interest rates four times in 2018, the Federal Reserve is projecting two more hikes to come in 2019. That could very well change as the year progresses as the current projection is down from the previously forecast three interest rate increases and Chairman Jared Powell has suggested further flexibility. Some analysts are even predicting the Fed won’t raise rates at all in 2019.
More marketing tips! Regardless of what 2019 brings, we’ll be here all year providing you with a weekly supply of industry insights, sales ideas, and marketing tips aimed at helping you succeed.