A challenge that faces many individuals planning for retirement, is maintaining the discipline to rebalance their accounts on a regular basis.
Looking back, 2018 certainly felt like a roller coaster ride for investors. After a fantastic nine year run where US stocks returned an annualized 15.44%, you can see why 2018’s results came as a surprise for many. Coming off their 4th best year since 2000, domestic stocks, as measured by the Russell 3000, had their first calendar year decline since 2008. The volatility in the equity markets seemed unusual given recent data, but in many ways 2018 provided a return to historical normalcy that we hadn’t seen yet this decade.
The end of the year is a popular time for organizations to give their employees raises, with many of those raises taking effect in the new year. Increases in income are an ideal time to reassess, and if possible, increase your contribution to your retirement plan.
While in 2018 US stocks have well outpaced international stocks, that is not always the case. Just last year international stocks outpaced US stocks by 6.4% and so far in the fourth quarter emerging markets have topped the US by 1.8%.
Each year the Internal Revenue Service (IRS) releases any new adjustments to retirement plan policies for the upcoming year. In November the changes for the 2019 calendar year were released. Highlights include:
- A Cost of Living increase for the contribution limits on employer retirement plans, 401(k)s, 403(b)s, 457 plans and TSPs, from $18,500 to $19,000
- A Cost of Living increase for IRA contributions from $5,500 to $6,000
- The annual catch-up amount for people over the age of 50 remained at $6,000 for employer plans and $1,000 for IRAs.
Check out all of the adjustment announced for 2019 here.
If you have any questions about the changes, please reach out to John McAuliffe, email@example.com