2018 Personal Finance Year in Review

Journal of Financial Planning: January 2019​​​​​​​


Special Report: 2018 Personal Finance Year in Review

by Barbara O'Neill, Ph.D., CFP®, Rutgers University

Barbara O'Neill, Ph.D., CFP®, is a distinguished professor in the School of Environmental and Biological Sciences at Rutgers University and is Rutgers Cooperative Extension's Specialist in Financial Resource Management. She has received more than 35 national awards for program excellence and over $1 million in funding to support financial education programs and research. O'Neill serves as the Academic Editor of the Journal of Financial Planning.​

For the past four years during December, I've presented a 90-minute webinar for financial educators and counselors that reviews key personal finance news stories that took place during the previous calendar year. It is one of just a few comprehensive annual reviews of personal finance research, events, legislation, trends, and educational resources in existence (NEFE and Next Gen Personal Finance also do trend reviews). The webinars are an eclectic collection of facts and figures on a wide variety of personal finance related topics.

This article presents a 2018 Personal Finance Year in Review webinar summary with embedded source links provided for additional information. If a link leads to a "paywall" that requires a subscription or payment, source material may be able to be accessed at no cost by searching online using an article's title and author. Information is organized according to its placement in various webinar segments beginning with empirical research findings and concluding with a preview of 2019 annual limits related to financial planning.​

Research Studies

Support of adult children. A 2018 study by Merrill Lynch and Age Wave with over 2,500 respondents who are parents found that 4 of 5 provide some type of support to adult children, including payments for food, cell phone service, car expenses, and vacations. Many have put their children's interests ahead of theirs by spending twice as much on children as they do saving for retirement.

Retirement. Not surprisingly, retirement preparation survey findings are worrisome. The 2018 Retirement Confidence Survey (RCS) by the Employee Benefit Research Institute found that 64 percent of workers reported that they or their spouse had saved any money for retirement. Among savers, 45 percent reported that the total value of their savings (excluding a primary home and defined benefit pension) was less than $25,000, including 26 percent with less than $1,000 in savings. Only 21 percent had saved $250,000 or more. Four in five (79 percent) RCS worker respondents planned to work in retirement, versus 34 percent of RCS retiree respondents who actually have—a big disconnect, often due to some type of hardship.

What to do about inadequate retirement savings? One recent study found that "once the average earner reaches their 50s, substantially increasing sustainable retirement resources by saving more has a significantly smaller impact than working longer does." Specifically working three to four years longer than planned can increase sustainable retirement resources by 24 percent to 33 percent through a combination of factors such as increased Social Security benefits, larger retirement savings account balances, and delayed asset withdrawals.

Another study found that showing projected monthly retirement income increases savings plan contributions. The same study also found that 52 percent of U.S. workers found it difficult to translate retirement savings into monthly income. When workers obtain this information, however, it is powerful. Almost half (48 percent) of plan participants increased their retirement plan contributions as a result of seeing their estimated monthly income (55 percent increase for millennials). A key implication of this study is that dollar amounts are more likely to encourage people to save money than vague language such as "X percent of pre-retirement income," or "Y percent chance of portfolio sustainability."

Another 2018 retirement-related study found that individuals targeting retirement before age 61 tend to retire later than expected. Conversely, those targeting retirement after age 61 retire approximately a half-year early for each additional year targeted past age 61. Key take-aways for practice were that "incorporating retirement age uncertainty into a financial plan can have a significant impact on required retirement savings levels" and that "financial planners should consider modeling early retirement to prepare clients for the (likely) possibility that it may occur."

Survivor benefits. An age-related study of Social Security benefit claiming by the Center for Retirement Research using an online experiment, found that husbands do not seem to consider the prospective drop in income experienced by their widows when choosing a benefit claiming age. Rather, husbands respond to more immediate concerns such as pension incentives and health conditions than to an information intervention that highlights the likelihood and consequences of widowhood. These results speak to a public policy need to "decouple" survivor benefits from a spouse's claiming age and for advisers to employ reframing techniques, even "guilting" language, to advocate for increased widows' income.

Financial health. The year 2018 saw the inaugural Center for Financial Services Innovation U.S. Financial Health Pulse Study, which found that only 28 percent of Americans are "financially healthy." Over half (55 percent) were categorized as "financially coping," and the remaining 17 percent were "financially vulnerable." Financial health was defined by eight indicators: (1) spend less than income; (2) pay all bills on time; (3) sufficient liquid savings; (4) sufficient long-term savings; (5) manageable debt load; (6) prime credit score; (7) have appropriate insurance; and (8) plan ahead for expenses. Of 5,019 respondents, 45 percent and 37 percent had sufficient liquid savings and long-term savings, respectively.

Physical health. With respect to physical health, the Kaiser Family Foundation annual survey of premiums for employer-provided family health care coverage found that the cost rose 5 percent to $19,616 in 2018. Workers paid $5,547, on average, for a family plan premium, or 29 percent of the total premium cost. The average 2018 deductible for individual worker coverage was $1,573, up from $1,135 five years ago.

Sleep was the subject of a study that found that those with sleep problems are more prone to display behavioral biases such as over-emphasizing the present and misunderstanding probabilities. Poor sleep habits can have important financial consequences, and it is believed that this finding might be associated with the prefrontal cortex of the brain.

Another 2018 study found that the practice of reading nutrition labels on foods was positively associated with higher scores on an index of financial practices, perhaps reflecting conscientiousness in both aspects of life.

Household finances. Several studies in 2018 by government agencies had noteworthy findings. A U.S. Census Bureau report indicated that 3.6 million bachelor's degree recipients, or 4.8 percent, were living in poverty. Bachelor's degree recipients were the only educational cohort to see the share of people in poverty rise.

The Federal Reserve reported a record $13.3 trillion in consumer debt (including mortgages, car loans, student loans, and credit cards) in second quarter 2018, with total debt now higher than before the 2008 financial crisis.

Another Federal Reserve study, the Survey of Household Economics and Decisionmaking (or SHED), found that 3 in 10 adults have a family income that varies from month to month and participate in the gig economy. In addition, 4 in 10 adults, if faced with an unexpected $400 expense, would not be able to cover it or would cover it by borrowing money or selling something. Less than 2 in 5 of non-retired adults think that their retirement savings is on track, and 1 in 4 have no retirement savings or pension whatsoever.

Key Financial Events and Trends

Fertility rate. In 2018, many events occurred, and trends were reported that directly or indirectly affected household finances. According to the National Center for Health Statistics, the general fertility rate for women age 15 to 44 was at the lowest point ever since the government began tracking it more than a century ago. One demographer noted, "The figures suggest that a number of women who put off having babies after the 2007-09 recession are forgoing them altogether." The only cohort of women with an uptick in first-time births is women over 35. This trend has widespread implications for millions of baby boom generation "wannabe" grandparents and home sellers, "a curious ripple effect in which the lengthening of one life stage for one generation leads to a delay in a life transition for a different generation."

Life expectancy. U.S. life expectancy rates declined for two years in a row, except for older women age 65+, who have a life expectancy of 20.6 years at age 65, versus 18 years for men. An increase in drug-related deaths among younger adults contributed to the drop in overall U.S. life expectancy. So-called "deaths of despair" involving substance abuse, suicides, and diabetes led to premature deaths among adults age 20 to 55 in nearly half the country.

Disability. The Centers for Disease Control and Prevention also reported that 1 in 4 non-institutionalized U.S. adults reported a disability with six disability types studied. Mobility was the most prevalent disability (13.7 percent), followed by cognition (10.8 percent), independent living (6.8 percent), hearing (5.9 percent), vision (4.6 percent), and self-care (3.7 percent). Not surprisingly, the prevalence of any disability was higher for older adults. Obvious implications from these findings exist for life and disability insurance and retirement planning.

Banking. On a more positive note, the U.S has seen a record low level of unbanked Americans. In 2017, 6.5 percent of U.S. households (14.1 million adults) were unbanked (defined as not having a primary bank account), versus 8.2 percent in 2011. The biggest improvement was among Black and Hispanic households. About 19 percent of American households are underbanked (defined as having a bank account but also using alternative financial services).

Credit. On the consumer credit front, a new business arrangement was announced between credit card issuers and financial services firm Credit Karma. Several major card companies are sharing their underwriting models with Credit Karma as part of a new service. Credit Karma, in turn, can tell its users with near certainty whether they will be approved for credit without having to formally apply and potentially lower their credit score. Credit Karma charges lenders a fee if its users take out a recommended loan. This new arrangement is widely viewed as evidence of lenders' desire for well-qualified new customers.

Loans. 2018 also saw a surge in unsecured personal loans, which are now the fastest-growing U.S. consumer lending category. Outstanding balances rose 18 percent in the first quarter to $120 billion. Unsecured loans appeal to people who don't want to use credit cards or tap home equity and are used to both consolidate debt and make large one-time purchases. Financial technology (fintech) companies originated 36 percent of total personal loans in 2017, versus less than 1 percent in 2010. Clearly, this ease of personal loan access is something for financial advisers to watch with clients.

In 2018, the average monthly new car loan payment broke the $500 mark and rose to an all-time high of $523. The average new car loan amount also reached a record high of $31,453 and the average length of a car loan was just over five years and nine months.

For subprime borrowers with credit scores of 600 and below, credit is much more expensive. The average subprime rate of 15.91 percent in 2017 rose to 16.84 percent. "For a 60-month loan of $20,000, that means a monthly payment hike of more than $100 to $495," resulting in fewer potential borrowers able to qualify for loans and extended loans with lower monthly payments.

Bankruptcy. Another troubling credit statistic is the increase in bankruptcy filing rates among older Americans. The rate at which Americans age 65+ are filing has more than tripled since 1991 while it has fallen for younger people. Median debt for bankrupt seniors is $101,600 or three times filers' average income. Reasons include reductions in safety net programs and the shift from defined benefit pensions to inadequately funded 401(k)s.

Sports betting. Another worrisome trend that occurred in 2018 is the rise of sports betting. In May, New Jersey won a U.S. Supreme Court case that removed the federal ban on sports betting across the U.S. As a result, people can make mobile bets on casino accounts anywhere in a state that allows it, which widely expands available options for gambling. New Jersey took in $40.6 million in sports betting wagers in July, the first full month that it was legal. By the end of October, more than a half-billion dollars was bet on sports at state casinos and racetracks or anywhere in the state on mobile devices. Residents from adjacent states have been crossing the border into New Jersey to place phone bets, with gas and bridge tolls viewed as "a cost of doing business."

Identity theft. A record number of 16.7 million U.S. identity fraud victims for 2017 was reported in 2018 with the amount stolen rising to $16.8 billion. With the adoption of EMV (chip) credit cards, fraud has shifted online (so-called "card not present fraud") and away from physical stores, often through fraudulent intermediary accounts (such as PayPal) and e-commerce merchants (such as Amazon). Nearly 30 percent of U.S. consumers were notified of a data breach in 2017. In addition, for the first time ever, Social Security numbers (35 percent) were compromised more than credit card numbers (30 percent) in data breaches. In response to these threats, recommended risk-reduction strategies for consumers include two-factor authentication, account alerts, and credit freezes.

Unemployment. Good news was reported in 2018 with respect to jobs and incomes. By May, the unemployment rate was 3.8 percent, the lowest rate since 1969, signaling a strong economy and a tight labor market. The gap between Black and white unemployment shrank to the narrowest level ever measured. Job gains were broad in many industry sectors with retail, health care, and construction adding the most jobs.

Wages. By October 2018, average wages were up 3.1 percent from the year before- the biggest one-year gain since 2009, and the unemployment rate was 3.7 percent. Low-skilled workers were among the biggest beneficiaries of the strong labor market.

Anniversaries and Milestones

Several financial anniversary milestones were reached in 2018.

ETFs. The first was the 25th anniversary of exchange-traded funds (ETFs). The first ETF was the S&P 500 SPDR (Spider) issued in January 1993.

Roth IRA. 2018 was also the 20th anniversary of Roth IRAs, which became available in January 1998. Funded with after-tax dollars, qualified distributions can be taken tax-free. In 2010, Congress eliminated the $100,000 Roth conversion income limit.

Bitcoin. 2018 was the 10th anniversary of bitcoin. The year also marked the 10th anniversary of the 2008 financial crisis.

Stock market. Several key stock market milestones took place during 2018. In June, General Electric was removed from the Dow Jones Industrial Average (DJIA) after being part of the index continuously since 1907. It was replaced by the drug store Walgreens in a move to make the DJIA more reflective of changes in the composition of the U.S. economy.

By late summer, before pronounced stock market declines in the fall, both Amazon and Apple reached $1 trillion in market value, and Fidelity reached $2 trillion in retirement plan assets.

In October 2018, the S&P 500 lost $1.91 trillion with losses spread widely across industry sectors. Among the hardest-hit stocks were the FANG technology companies: Facebook, Amazon, Netflix, and Google parent company Alphabet. Future interest rate uncertainty kicked off downward market volatility. By mid-November, market gains for 2018 were completely wiped out by decreased stock values. In addition to rising interest rates, disappointing retail earnings reports were also cited as a cause.

Social Security. Social Security program reached a worrisome tipping point in 2018. For the first year since 1982, the program's costs will exceed its income, forcing the program to dip into its nearly $3 trillion trust fund to pay benefits. This was three years earlier than expected a year ago, partly due to lower economic growth projections. The 2018 report of Social Security trustees also estimated that the trust fund will be depleted by 2034, resulting in reduced benefit payments unless Congress makes changes.

FIRE. Related to retirement, but at a much younger age, the FIRE (Financial Independence, Retire Early) concept "caught fire" in 2018, with articles and a video promoting an upcoming documentary film about the concept of extreme frugality and aggressive savings in early adulthood to "live life on your own terms" at a relatively young age (mid-40s). The FIRE concept is not without its critics, however. Some argue that it is only viable for young adults with above-average incomes and/or no children. Many devotees also continue to work as freelancers, although admittedly on their own terms. Another key critique is that many young retirees plan to follow the 4 percent rule (spend 4 percent of initial nest egg annually, adjusted for inflation) developed by Bill Bengen, who cautions it was developed for a retirement period of 30 years, not 45 or 50.

Taxes. 2018 was the first tax year following passage of the Tax Cuts and Jobs Act (TCJA) and Americans adjusted via income tax withholding, housing decisions, divorce plans, financial record-keeping, charitable donations, and in many other ways. The TCJA was the largest tax overhaul since the 1980s. Concerns have been raised about people most likely to be underwithheld or underpaid. This group includes working couples with no children, families with children who have reached age 17, taxpayers in high-tax states who will be impacted by the state and local tax (SALT) cap and did not formerly pay the alternative minimum tax (AMT), and folks who had significant itemized miscellaneous deductions including tax and financial advisory fees, union dues, and unreimbursed employee business expenses such as mileage.

Another key change is that only about 18 million taxpayers will itemize deductions in 2018 versus 47 million in 2017. Concerns have been raised about the impact of this change on non-profit charities when taxpayers can no longer claim a deduction for charitable gifts. The new tax rules provide a unique "natural experiment" opportunity for researchers to study what factors motivate donors and whether tax deductions are a "deal-breaker."

2018 is also a great time for financial advisers to educate clients about tax-advantaged gifting strategies that don't require itemizing: transferring RMD withdrawals directly to eligible charities (if age 70½+), gifting appreciated securities, charitable remainder trusts, and "bunching" donations with or without the use of donor advised funds.

Also related to the TCJA and income taxes, proposed creative strategies by high-tax states to classify their state income taxes as "charitable contributions" were blocked by the Treasury Department. In August, the IRS released drafts of the new 1040 income tax return, which looks somewhat like a postcard. The new form consists of two halves of a standard 8.5" x 11" sheet of paper and six accompanying worksheets. Millions of taxpayers will save significant tax preparation time on 2018 taxes (e.g., preparing their own returns or assembling receipts for a paid preparer). Many lines used on previous tax forms have disappeared.

There are concerns that the simpler-looking form (and inability to deduct tax preparation fees) may encourage some of the 90 percent of taxpayers who filed electronically last year to bypass paid preparers and mail in paper returns. If this happens, "it could overwhelm an already stressed system" and reintroduce past hand-calculation errors.

IRS data released in 2018 showed that the agency audited about 1 in 160 individual tax returns in 2017, the lowest rate since 2002 and the sixth consecutive year that audits declined. The IRS lost nearly a third of its enforcement employees since a 2010 peak when it audited 1 in 90 individual tax returns. The audit rate for high-income households dropped the most, although they were still audited at a higher rate than taxpayers at other income levels.

A 2018 event related to both income taxes and retirement planning was the increase in state-sponsored savings plans for workers in small businesses in the wake of the discontinuation of the federal government myRA plan. By October 2018, 10 states (CA, CT, IL, MA, MD, NJ, NY, OR, VT, and WA) had agreed to create a retirement program for private-sector employees. The employer accounts are Roth IRAs that employees invest in via payroll deduction.

401(k)s. In November, new guidance from the U.S. Labor department will allow employers to automatically transfer small retirement account balances of departing workers to the 401(k)s of their new employers, if employees don't opt out. This policy change has the potential to prevent some of the "leakage" that occurs when workers cash out of plans and spend the money.

Older adults. Several issues related to older adults received media attention in 2018. One is the growing evidence of wealth gaps among baby boomer retirees, many of whom are unprepared to maintain their standard of living. This has led to disagreements within retirement communities about spending on amenities such as a pickleball court.

In addition, the terms "elder orphan" and "solo ager" became more widely used in growing recognition that a projected 22 percent of older adults are (or will be) growing older without the "safety net" of a spouse or children. Elder orphans will need to develop proactive plans with their financial and legal advisers, who may be asked to perform "concierge" services that family members might ordinarily assist with.

Gifting. Charitable gift planning will also be critical. In June 2018, it was reported that charitable gifting in the U.S. topped $400 billion for the first time ever in 2017. This milestone was fueled by stock market gains, very large gifts by billionaires, and increased use of donor advised funds. As a percentage of disposable income, however, average Americans gave 2 percent, down from 2.4 percent in 2000 and the same rate as in 1978.

Home ownership. A January 2018 article noted that the U.S homeownership rate rose for the first time since 2004, to 64.2 percent in the fourth quarter of 2017. By the third quarter of 2018, the homeownership rate had risen to 64.4 percent, driven by young adults entering the housing market for the first time. At the same time, the supply of homes available for sale has dropped for the past three years, leading to price increases in many areas and an overall seller's market. The median price of an existing home sold in May was $264,800. Future effects could be far-reaching. With more millennials moving out of their parents' homes, their parents may decide to downsize locally or move somewhere else, thereby impacting local real estate prices via supply and demand.

Fintech. 2018 continued to see an increase in the use of fintech tools for a wide variety of personal finance activities including budgeting, banking, and online payments. The term fintech is used to describe innovative technology companies operating in the financial services sector.

Three big fintech trends of note were the growth of blockchain and distributed ledger technology in a wide variety of industry sectors, increased use and improvements in artificial intelligence (AI), and increased attention to cybersecurity in the wake of high-profile data breaches and cybercrimes.

DOL rule. 2018 also saw the official end to the U.S. Department of Labor (DOL) fiduciary rule, which would have required all financial advisers to act in their client's best interests when managing retirement accounts. A federal circuit court ruled that the DOL had "overreached" its mission in proposing the new conflict of interest standards.

Key Trends

Five key trends from 2018 will continue to affect personal finances in the years ahead:

Tax reform taking hold. Many Americans won't truly understand the full impact of the Tax Cuts and Jobs Act (TCJA) on their personal finances until they file their 2018 tax return due in April 2019. At this point, there could be changes made by many in tax withholding (net income) and/or charitable giving.

"The Great Delay" by millennials. Delays by young adults in establishing households, marriage, and children will continue to be watched for impacts on various industry sectors and other family members.

Workplace demographic shifts and near full employment. As baby boom generation workers continue to exit the labor force, many businesses can't find enough workers to fill jobs. In May 2018, the U.S. had a record 6.6 million job openings, which bodes well for older adults seeking "encore" careers.

Rising cost pressures. Prices on many goods and services that consumers buy are expected to increase as a result of wage increases, rising interest rates and energy costs, and/or U.S. tariffs and trade policies.

An inevitable recession. A survey of business economists in May 2018 found widspread predictions of a recession starting in late 2019 to the end of 2020. A key reason is the shrinking gap between short- and long-term interest rates leading to an inverted yield curve, which has historically signaled a recession.

Government Legislation and Policy Changes

Medicare. In April 2018, new Medicare cards with a unique individual number, instead of a Social Security number, began to be mailed out, a process that will continue through April 2019. This change is being made to deter identity theft and Medicare fraud. Not surprisingly, associated incidents of Medicare fraud have since occurred, such as con artists charging victims fees for "processing" or telling people that their card has to be "activated" by divulging personal data.

Credit freeze. Another policy change, effective on September 21 as a result of a new federal law (the Economic Growth, Regulatory Relief, and Consumer Protection Act), was that free credit freezes and unfreezes and year-long fraud alerts are available nationwide. In an effort to combat child identity theft, free credit freezes are also available for children who are under age 16 and for people who are someone's guardian or have a valid power of attorney. Online freeze requests and those made by phone must take place within one business day.

Online sales tax. Also in 2018, the Supreme Court ruled that states have the authority to make online retailers collect state sales taxes on purchases made by their residents. This decision overruled a prior case that required a merchant's physical presence in a state for it to have to collect sales tax. With this ruling, e-commerce is being viewed as a mature retail market sector presence. Adding sales taxes will have the effect of raising prices for goods purchased online and reducing a price advantage of online shopping. States, of course, will benefit from a decrease in uncollected sales taxes that consumers were supposed to pay but most didn't.

Military. One of the biggest personal finance issues affecting military families is the new Blended Retirement System (BRS) that went into effect on Jan. 1, 2018. Active duty service members with less than 12 years of service on Dec. 31, 2017 have the option of choosing the BRS or staying in the legacy retirement system (commonly referred to as the High-3 System). An irrevocable decision must be made anytime during calendar year 2018, and no one will be automatically moved to the BRS. Eligible service members who want to stay covered under the legacy system can simply do nothing. A calculator was developed by the Department of Defense to help eligible service members compare the two options.

New Financial Education Resources

Public pension. A 55-minute PBS documentary film, The Pension Gamble, first aired in 2018. While focusing on pension challenges in Kentucky, it examines the consequences of public pension under-funding for teachers, police, firefighters, and other public workers everywhere.

Tax planning. In the wake of the Tax Cuts and Jobs Act, the IRS revised its online tax withholding calculator in 2018 and urged taxpayers to use it to avoid being underwithheld and possibly having to pay penalties. A variety of automatic tax indexing changes took place in 2018 and are summarized in the College for Financial Planning document Annual Limits Relating to Financial Planning.

Financial literacy. The youth financial education non-profit, Next Gen Personal Finance, developed a number of new resources in 2018 including STAX (an investment decision-making game), Cat Insanity (a debt repayment analogy game), a revised Financial Pitfalls Unit (new lessons, activities and projects), FinCap Fridays (combination of a Kahoot quiz game, short video, discussion questions, and resources), a Quiz Game Library (financial education games using Quizlet and Kahoot), a banking simulation, an updated video library, updated semester course content, and a Brush Up On Content webinar series.

The federal government Bureau of Consumer Protection (formerly called the CFPB), which officially changed its name in 2018, developed an online list of youth financial education resources for teachers.

Looking Ahead to 2019

In 2019, for the first time ever, there will be more Americans over age 60 than under age 18, a shift that is predicted to become even more pronounced over time with implications for social services, school funding, Social Security, and many other pocketbook issues.

Credit scores. Also coming in 2019 are pilot tests of UltraFICO credit scores that have the potential to make credit available to more people. UltraFICO scores will be calculated using people's bank transaction data, such as activity in checking and savings accounts, in an attempt to provide credit access to people with "thin" credit files using other indicators of creditworthiness. Concerns have been raised, however, about riskiness of the scores to lenders, privacy, and potential data breaches.

Social Security. Modest changes were announced for the Social Security earnings limit, which will rise from $17,040 per year in 2018 to $17,640 in 2019. The amount of earnings required to earn a quarter of coverage will increase from $1,320 in a three-month period in 2018 to $1,360 in 2019, and the maximum monthly benefit will rise from $2,788 to $2,861. Maximum taxable earnings subject to Social Security tax will be $132,900 in 2019, up from $128,400. The cost of living adjustment (COLA) for Social Security benefits in 2019 is 2.8 percent.

HSAs. Modest changes were also announced for tax-deferred savings plans. The contribution limit for self-only health savings accounts (HSAs) will increase by $50 in 2019 from $3,450 to $3,500. Family plan contributions will increase by $100 from $6,900 to $7,000, and catch-up contributions for people age 55+ ($1,000) will remain the same.

HDHPs. The required amount for high deductible health plan (HDHP) minimum deductibles will remain unchanged at $1,350 (self-only) and $2,700 (family), respectively, in 2019. The 2019 contribution limit for flexible spending accounts for health care expenses (health FSAs) is $2,700, up $50 from the 2018 limit of $2,650. Employers may offer one of two available options for unspent Health FSA funds at year-end: a carryover of up to $500 or a grace period through March 15 of the following year.

Workplace retirement plans. Contribution limits for tax-deferred retirement savings plans will change slightly. The maximum amount that workers can contribute to a workplace retirement savings plan will increase $500 from $18,500 in 2018 to $19,000 in 2019. The additional $6,000 maximum catch-up contribution for workers age 50 and older will remain the same for a maximum contribution limit of $25,000 for older workers.

IRAs. The 2018 maximum contribution of $5,500 for an individual retirement account will increase to $6,000 in 2019. With the $1,000 catch-up contribution, which remains unchanged, the maximum IRA contribution for workers age 50 or older at year-end is $7,000.

The 2019 Roth IRA income phase-out ranges will be $122,000 to $137,000 for singles and heads of household and $193,000 to $203,000 for married couples filing jointly.

The 2019 Retirement Savers Credit income limits will be $32,000 for individuals, $48,000 for heads of household, and $64,000 for married couples filing jointly.

The 2019 contribution limit for SIMPLE IRA plans will be $13,000 and the maximum annual pension plan benefit in 2019 will be $225,000, up from $220,000.


T​his article has described dozens of 2018 research findings, trends, and government ​policy changes related to personal finance, new financial education resources, and 2019 changes. A mixture of positive trends and financial insecurity indicators were presented. As always, financial practitioners need to stay current on the ever-changing financial landscape and how it affects their own personal finances and that of their clients.​​

General Financial Planning Principles