Thursday, December 27, 2018

Twenty Key Personal Finance Events of 2018

As 2018 winds down, it is useful to review research, events, and trends that took place and predictions for the future. I recently presented a webinar for the eXtension Military Families Learning Network titled 2018 Personal Finance Year in Review. Below are 20 highlights:

  • Support to Adult Children- A 2018 study found that four of five parents provide some type of support to adult children, twice as much money as they save for retirement.
  • Retirement Confidence- The 2018 Retirement Confidence Survey found that 64% of workers reported that they or a spouse had saved money for retirement; 45% had less than $25,000 saved.
  • The Power of Working Longer- 2018 research found working 3-4 years more increases sustainable retirement income by 24%-33%; for older workers age 50+, it is more powerful than saving more.
  • Retirement Income Illustrations- A 2018 study found that 48% of retirement plan participants increased their contributions after seeing their estimated monthly income (55% for millennials).
  • Financial Health- According to the inaugural U.S. Financial Health Pulse study by the Center for Financial Services Innovation, only 28% of Americans are financially healthy.
  • Household Borrowing- Total U.S. consumer debt reached $13.3 trillion in mid-2018 and is higher than before the 2008 financial crisis.
  • Financial Fragility- The 2018 Federal Reserve SHED study found that 3 in 10 adults have volatile family incomes and 4 in 10 could not cover an unexpected $400 expense without borrowing money.
  • Low Birth Rate- The lowest U.S. birth rate ever was reported in 2018, with financial implications for baby boom generation “wannabe” grandparents and home sellers.
  • Low Unbanked Levels- 2018 saw a record low number of Americans without a bank account; 6.5% of U.S. households were unbanked vs. 8.2% in 2011. About 19% of households are underbanked.
  • Surge in Personal Loans- Personal loans surged as the fastest-growing U.S. consumer-lending category. Over a third (36%) of these loans were originated via financial technology companies.
  • A Rise in Sports Betting- A May 2018 Supreme Court decision allowed sports betting and it has surged in states that allow it.
  • All Time High Car Payments- The average monthly loan payment for a new car hit an all-time high of $523, the average loan amount was $31,453 and the average loan length was 5 years, 9 months.
  • Older Adult Bankruptcies- The rate at which Americans 65+ are filing for bankruptcy has more than tripled since 1991. Filing rates are rising for older Americans and falling for younger people.
  • Rampant Identity Theft- A record 16.7 million Americans were identity theft fraud victims in 2017. For the first time ever, Social Security numbers were compromised more than credit card numbers.
  • Low Unemployment- An unemployment rate of 3.8% in May 2018 was the lowest since 1966 and a sign of a strong economy and a tight labor market. In November 2018, it was 3.7%.
  • Social Security Tipping Point- Program costs exceeded income in 2018 for the first time since 1982, forcing Social Security to dip into its nearly $3 trillion trust fund.
  • Post-TCJA Tax Planning- 2018 is the first year that Americans will file taxes following passage of the Tax Cuts and Jobs Act. There are concerns that some people will have inadequate tax withholding.
  • Rise in State Savings Plans- Almost a dozen states took steps to establish state-sponsored savings plans for workers in small businesses with Roth IRAs funded by employees via payroll deductions.
  • New Medicare Cards- New Medicare cards with unique identifying numbers, instead of Social Security numbers, started to be mailed out in April 2018 in an effort to combat identity theft.
  • Anniversary Milestones- 2018 marked the 25th anniversary of exchange-traded funds (ETFs), the 20th anniversary of Roth IRAs, and the 10th anniversary of the 2008 financial crisis and bitcoins. It was also the 40th anniversary of the establishment of 401(k) retirement savings plans.

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