Financial Tips For 2020
Financial Planning | The U.S. has enjoyed 10 years of a booming stock market and a growing economy. It’s too early to tell how 2020 will look, but there are some signs that it doesn’t look quite as promising. Between warnings of a possible economic pullback and a contentious presidential election year, investors may want to consider financial moves designed to help protect gains and optimize future opportunities. This is a good information that is essential in knowing the financial tips for 2020.
For example, while domestic securities were global leaders in 2019, Morgan Stanley believes U.S. stocks and bonds will underperform other developed countries in 2020. The wealth manager predicts the S&P 500 Index will have a small decline to 3,000 points by the end of the year as the dollar weakens, corporate earnings edge downward and “unique” political risks are expected in the run-up to Election Day.
Financial tips for 2020 – We recommend that individuals take a long view when it comes to investing, particularly in relation to retirement planning. However, as we approach this new decade, it may be important to review your portfolio’s overall asset allocation, not just within the context of 2020, but for your long-term financial objectives. Please give us a call if we can help you make this assessment.
As for retirement planning, be aware of three changes scheduled to impact Social Security benefits in 2020:
- The earnings limit subject to FICA payroll taxes is scheduled to increase by $4,800, to $137,700. This means employees who earn at or above that threshold will pay an additional $367 in payroll taxes during 2020.
- Retirees received a 1.6 percent boost in Social Security benefits, which translates to roughly $288 (on average) more for the year.
- Social Security recipients who haven’t reached full retirement age can earn $600 more in 2020 without a benefits reduction — up to $18,240. Beyond that limit, every $2 in earnings will result in $1 withheld in benefits.
It’s a good idea to consider your income tax status early in the year. A lot of people did not expect the Tax Cuts and Jobs Act to negatively impact their taxes and received an unpleasant surprise when they filed returns last year. You can help prevent having to owe additional taxes on filing day by adjusting your Form W-4 exemptions with your employer so that more income is withheld throughout the year.
Also consider making your 2020 contributions to tax-advantaged accounts as early in the year as you can. That’s because any contributions you make to accounts such as IRAs, 529s and workplace retirement plans will have more time to take advantage of tax-deferred compounding growth.
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