Retirement Planning
Jan 02, 2019

Dive into 2019 with these 6 important financial considerations

As the holiday season ends and we begin the new year, many retirees have questions about what’s in store for their finances in 2019. There’s plenty to talk about, so we’ve chosen 6 things that oil, gas, and chemical employees/retirees should know for the next calendar year. Let’s take a look. 1.    No structural tax bracket changes this year 2018 was a year of significant tax reform, as Americans were introduced to a new tax bracket structure as per the Tax Cuts and Jobs Act of 2017. This updated structure will remain in 2019 but, in contrast to last year, changes will be restricted to minor alterations to keep pace with inflation. You can check out this year’s new brackets, below:
Rate For Unmarried Individuals, Taxable Income Over For Married Individuals Filing Joint Returns, Taxable Income Over For Heads of Households, Taxable Income Over
10% $0 $0 $0
12% $9,700 $19,400 $13,850
22% $39,475 $78,950 $52,850
24% $84,200 $168,400 $84,200
32% $160,725 $321,450 $160,700
35% $204,100 $408,200 $204,100
37% $510,300 $612,350 $510,300
Source: The Tax Foundation 2.   New Medicare Options & Small Changes in Premiums The Medicare landscape is changing in a few important ways this year. For one, the number of Medicare Advantage options — as well as Part B and Part D options — will grow, which means you may have more retirement healthcare options to choose from. A new open enrollment period for Medicaid Advantage started on January 1st and runs to March 31st. Until then, you’ll be able to switch to another Advantage plan or drop down to a standard Medicare Part A or Part B, or a Part D prescription drug plan. This is a change from 2018’s framework, which only set a Medicare Advantage disenrollment deadline of February 14###sup/sup###. Premiums will change slightly, depending on what Medicaid plan you are enrolled in. Part B beneficiaries could experience a 1 percent increase in monthly premiums, while Part D premiums will drop just $1. 3.   Social Security Payments Will Increase            With the new year, Social Security beneficiaries will see their payments increase by 2.8 percent, the largest since a 3.6 percent jump in 2012. In action, this will increase the average monthly payout from $1,422 in 2018 to 1,461 in 2019 — a change of $39. The monthly maximum for SS payouts has also increased, from $3,698 to $3,770, though only a few of us will qualify for such a generous check. As the average SS check grows in 2019, so will your maximum taxable earnings limit. Over the past year, employees have paid a 6.2 percent Social Security tax on all income up to $128,400. For 2019, the limit has been raised to $132,900. Accessing your SS information this year may be a bit easier, too. As of December 2018, your Social Security Cost-Of-Living Adjustment (COLA) will be available on the Social Security website, accessed through your personal account. Note that COLA notices will continue to be sent through the US Postal Service as well, so the less computer-savvy of us can keep doing things the “old-fashioned” way. 4.   The fed funds rate could reach 3% The fed funds rate, which all short-term investments follow, is set to continue increasing into 2019. It had already seen an increase on December 18, 2018, to 2.5 percent, and it is expected to jump to 3 percent in 2019. Increases like these can have an impact on many kinds of borrowing, especially on consumer debt like credit cards, loans, and home equity lines. If you have personal debt, make sure you’ve spoken to a financial advisor and understand how a rate hike could impact your finances. For the savers out there, this may come as welcome news. While a typical interest rate on a savings account currently hovers around 0.2 percent, some online banks are now offering rates of up to 2.4 percent. If you’re thinking about stashing some of your cash, now might be the right time to consider your options. Talk to your advisor. 5.    Higher IRA and 401k contribution limits For those of us still preparing for retirement, you’ll be able to put away a bit extra into your 401k or IRA over the next year. Both plan types will see a $500 increase to the contribution limit — $19,000 for a 401(k) and $6,000 for an IRA. For soon-to-be retirees over the age of 50 making catch-up payments, your limits will remain the same for 2019, with a maximum additional contribution of $6,000 for a 401(k) and $1,000 for an IRA. 6.    The Permian Basin will keep performing Lastly, a bit of good news for US gas, oil, and energy professionals: Thanks in large part to historic discoveries in the Southern US’ Permian basin, American oil looks poised to have an exciting 2019. According to a Q3 Dallas Fed survey, most oil executives expect supply chain bottlenecks to be solved within the new year, meaning that production within the US could improve considerably in the next 12 months.
Do 2019 right A new year is always exciting, but new financial decisions can be daunting and what we’ve listed here just scratches the surface of what to expect in 2019. If your New Year’s resolution is getting a better grip on your retirement, why not get some help from the experts who know retirement best? Here at Baird Retirement Management, we’re ready to make 2019 your best year yet. Let’s see how we can help you.

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