Social Security And Retirement: What You Should Know In 2025
FILE - The U.S. Social Security Administration office is seen in Mount Prospect, Ill., Oct. 12, ... More 2022. (AP Photo/Nam Y. Huh, File)
Social Security is a cornerstone of the United States' social safety net. Many Americans depend on this program to fund their retirement. The most recent data available from the Social Security Administration highlights the program's critical role in retirement planning.
Social Security benefits account for approximately 30% of the income for individuals ages 65 and older. Retirement income was envisioned as a three-legged stool consisting of pensions, personal savings, and Social Security, each contributing one-third. The program was never intended to serve as the primary source of retirement income.
The extent of reliance varies significantly by income quintile; note the 1st quintile is the lowest 20% of taxable income and the 5th is the highest 20%:
1st quintile, 64.1% rely on Social Security for 90% or more of their income in retirement.
2nd quintile, 47.8% rely on Social Security for 90% or more of their income in retirement.
All the way up to the 5th quintile, none of whom rely on Social Security for 90% or more of their income in retirement.
RIVERSIDE, CALIFORNIA - APRIL 5: People join in a "Hands Off!" protest against the Trump ... More administration on April 5, 2025 in Riverside, California. Protests against Trump administration policies and Elon Musk's Department of Government Efficiency (DOGE) are being held nationwide in what organizers are calling a National Day of Action. (Photo by)
The program faces significant challenges. Without reform, Social Security will not be able to pay full benefits by 2033. This presents a critical issue for Congress, as reductions in benefits are politically and socially untenable. Many changes are being made to the program via the Department of Government Efficiency. Further The Social Security Fairness Act was passed into law on January 5th, 2025 and this brought more changes to the program.
Despite its importance, many people are unaware of how their Social Security benefits are calculated. Since the Social Security Administration ceased mailing statements in 2011, individuals must proactively set up an online account to access this information.
The benefit formula is intentionally progressive, favoring lower-income earners by replacing a higher percentage of their income. For higher-income earners, Social Security becomes less significant as a percentage of their total retirement income.
1. Credits: To qualify, individuals must earn 40 credits. In 2025, one credit is earned for every $1,810 in covered earnings (most often wages), with up to four credits given annually.
2. Average Indexed Monthly Earnings: The AIME figure is based on a worker's 35 highest-earning years, adjusted for inflation. If fewer than 35 years of earnings exist, zeros are averaged in.
3. Primary Insurance Amount: This is the monthly benefit a person receives at full retirement age. PIA is calculated using a formula adjusted annually for inflation.
Bend points are critical to the calculation and can be used to ensure you draw as much as possible in retirement.
For a retiree with an AIME of $7,391 (This is annual wages of $88,692 in 2025 dollars):
• 90% of the first $1,226 = $1,103.40
• 32% of the amount between $1,226 and $7,391 = $1,972.80.
• Total PIA = $3,076.20 (before Medicare premiums).
To optimize benefits:
• Aim for an AIME of at least $1,226, as the first tier yields a 90% replacement rate.
• Understand that amounts above $7,391 are replaced at only 15%.
Reviewing your lifetime earnings is crucial to ensure accuracy. Errors are far easier to correct early on than later on, when reconstructing decades-old income records may be challenging.
Since 1983, up to 85% of Social Security income has been subject to federal taxes, depending on other income sources. This makes the program more progressive but also adds complexity to retirement planning. Consider discussing this with your tax professional and financial planner.
When to begin drawing Social Security benefits is a critical decision, particularly for married couples. Meeting with a qualified financial planner may be appropriate. Starting benefits early results in reduced monthly payments, while delaying up to age 70 increases them. Careful analysis and planning are essential to maximize lifelong benefits.
Social Security is a vital program for most Americans. Understanding its mechanics and planning effectively can significantly impact your retirement security and should be carefully considered before retirement.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
New York Times
17 minutes ago
- New York Times
Live Updates: Manhunt for Minnesota Assassin Enters 2nd Day as State Mourns Victims
The police have said that the suspect in Saturday's attacks, Vance Boelter, 57, disguised himself as a police officer before going to the homes of two state lawmakers in the Minneapolis suburbs. The man suspected of shooting two Democratic state lawmakers in Minnesota early on Saturday had served on a state board with one of the victims, records show. The suspect identified by the authorities, Vance Boelter, 57, was appointed several times by Minnesota governors to the Workforce Development Board, where he served with State Senator John A. Hoffman, who was shot and survived. Mr. Boelter and Senator Hoffman attended a virtual meeting together in 2022 for a discussion about the job market in the aftermath of the coronavirus pandemic, minutes from the meeting show. Drew Evans, the superintendent of the Minnesota Bureau of Criminal Apprehension, said investigators did not yet know how well the two knew each other, if at all. Mr. Boelter was appointed to the board in 2016 by Mark Dayton, a Democrat who was then the governor. More recently, he was appointed by Gov. Tim Walz, also a Democrat. The board has 41 members who are appointed by the governor, and its goal is to improve business development in the state. A state report in 2016 listed Mr. Boelter's political affiliation as 'none or other,' and another report in 2020 listed him as having 'no party preference.' Voters do not declare political affiliation when they register in Minnesota. The police have said that the suspect in the attacks disguised himself as a police officer and went to the homes of two state lawmakers in the Minneapolis suburbs. He shot and wounded Senator Hoffman, and his wife, Yvette, and fatally shot State Representative Melissa Hortman, and her husband, Mark. He remains on the run. U.S. Senator Tina Smith, Democrat of Minnesota, said in an interview that the gunman had a list that included her name and the names of other lawmakers, all of whom were Democrats. The list included about 70 potential targets, a federal law enforcement official said, including doctors, community and business leaders, and locations for Planned Parenthood and other health care centers. Some of the targets were in neighboring states. Image A State Patrol helicopter flies near a home where a search warrant was executed in Minneapolis on Saturday. Credit... Tim Gruber for The New York Times David Carlson lives at an address in Minneapolis where the police executed a search warrant for Mr. Boelter and said he has been one of his best friends since fourth grade. Mr. Boelter's listed address is in Green Isle, Minn., about an hour's drive away. Mr. Carlson said that Mr. Boelter also rented a room in the same home as him, and stayed there several days a week. Mr. Boelter worked at a funeral home, owned guns and had voted for President Trump last year, he said. Mr. Carlson read a text message that he had received from Mr. Boelter early on Saturday morning, in which he wrote that he might be dead soon. The message did not describe any details of the attacks, Mr. Carlson said. On Friday, Mr. Boelter had given Mr. Carlson four months' worth of advance rent payments — which was about $220 a month — for a small room in the shared house. He had said he needed some rest and so Mr. Carlson left him alone. Mr. Carlson said Mr. Boelter is a Christian who strongly opposed abortion. He had never mentioned either of the lawmakers who were shot, Mr. Carlson said, and had generally avoided talking about politics. He said Mr. Boelter had been experiencing financial and mental health challenges. Mr. Boelter and his wife run a private security company in Minnesota, according to its website. The company, Praetorian Guard Security Services, lists Mr. Boelter as the director of security patrols and his wife as the president. The firm's website describes using Ford Explorer S.U.V.s, 'the same make and model of vehicles that many police departments use.' On Saturday afternoon, the police towed a Ford Explorer from outside Representative Hortman's home. The firm says it offers only armed security. 'If you are looking for unarmed guards, please work with another service to meet your needs better,' the website says. Image The police towing a Ford Explorer that they said the suspect used from near Representative Melissa Hortman's home in Brooklyn Park, Minn., on Saturday. Credit... Tim Gruber for The New York Times Mr. Boelter's public professional history is varied. State reports and his LinkedIn profile indicate that he was recently a general manager of a 7-Eleven in Minneapolis and, before that, had worked as the general manager of a gas station in St. Paul. A report in 2017 listed him as an executive at an energy company. More recently, he had said on LinkedIn that he was the chief executive of a company called Red Lion Group, in the Democratic Republic of Congo, dedicated to creating 'good jobs for local people,' according to its website. Mr. Boelter has delivered several sermons at a church in the Democratic Republic of Congo. In a video of one that was posted online, he appeared to criticize gay and transgender people. 'There's people, especially in America, they don't know what sex they are,' he said. 'They don't know their sexual orientation, they're confused. The enemy has gotten so far into their mind and their soul.' In the sermon, he said he had given his life to Jesus as a teenager and had been blessed with five children. In a video posted online, seemingly for an educational course, Mr. Boelter said he had picked up work at funeral homes to help pay his bills. It was not clear when the video was uploaded, but Mr. Boelter said he worked six days a week for two funeral homes in the Minneapolis area. At one, he said, he sometimes helped to remove bodies from crime scenes and would work with police officers and death investigators. A spokesman for Des Moines Area Community College, in Iowa, said Mr. Boelter took classes in the school's mortuary science program, an online program, in 2023 and 2024. The website for Mr. Boelter's security company makes expansive claims about his work experience, which could not immediately be verified, including that he had been 'involved with security situations' in the West Bank and Gaza Strip and that he had worked for 'the largest U.S. oil refining company, the world's largest food company based in Switzerland and the world's largest convenience retailer based in Japan.' Image Sweeping the neighborhood near the home of Ms. Hortman in Brooklyn Park, Minn., on Saturday. Credit... Tim Gruber for The New York Times I.R.S. tax forms show that Mr. Boelter and his wife once led a Christian nonprofit called Revoformation Ministries. An archived version of the group's website described Mr. Boelter as becoming an ordained minister in 1993. Mr. Boelter, the site said, had traveled previously to violent areas 'in the Gaza Strip and West Bank,' the site said, and had 'sought out militant Islamists in order to share the gospel and tell them that violence wasn't the answer.' In November 2018, Mr. Boelter urged his followers on LinkedIn to vote in that year's election, saying he had been to countries where people could not elect their leaders and that were 'not places that anyone of us would want to live in.' 'I am very big on just telling people to be a part of the process and vote your values,' he wrote, 'and be part of this adventure we are all a part of living in the United States of America.' 'I think the election is going to have more of an impact on the direction of our country than probably any election we have been apart of, or will be apart of for years to come,' he continued. One of the victims on Saturday's attacks, Ms. Hortman, ran successfully for re-election that year. Julie Bosman , Kevin Draper , Adam Goldman , Bernard Mokam and Jay Senter contributed reporting. Jack Begg and Kitty Bennett contributed research.
21 minutes ago
Macron to visit Greenland to show European support for the strategic Arctic island coveted by Trump
NUUK, Greenland -- French President Emmanuel Macron's first trip to Greenland, the strategic Arctic island coveted by U.S. President Donald Trump, is aimed at shoring up Europe's political backing for Denmark and its semiautonomous territory. Macron's visit on Sunday comes just ahead a meeting of the Group of Seven leading industrialized nations next week in Canada that will be attended by both Macron and Trump. The French president's office said the trip to Greenland is a reminder that Paris supports principles of sovereignty, territorial integrity and the inviolability of borders as enshrined in the U.N. charter. Macron is also to meet with Danish Prime Minister Mette Frederiksen and Greenlandic Prime Minister Jens-Frederik Nielsen. Macron mentioned Greenland last week in his opening speech at the U.N. Ocean Conference, saying it isn't 'up for grabs' in remarks that appeared directed largely at Trump. 'The deep seas are not for sale, nor is Greenland up for grabs, nor are the Arctic or the high seas for sale, nor are fishing licenses in developing countries up for grabs, nor are scientific data and the security of coastal populations to be sacrificed,″ Macron said at the summit in Nice, France. Macron in recent months has sought to reinvigorate France's role as the diplomatic and economic heavyweight of the 27-nation European Union. The French president has positioned himself as a leader in Europe amid Trump's threats to pull support from Ukraine as it fights against Russia's invasion. Macron hosted a summit in Paris with other European heads of state to discuss Kyiv, as well as security issues on the continent. Sunday's visit will also be the occasion to discuss how to further enhance relations between the EU and Greenland when it comes to economic development, low-carbon energy transition and critical minerals. The leaders will also have exchanges on efforts to curb global warming, according to Macron's office. A meeting between Macron, Frederiksen and Nielsen will take place on a Danish helicopter carrier, showing France's concerns over security issues in the region, Macron's office said. Last week, U.S. Defense Secretary Pete Hegseth appeared to acknowledge that the Pentagon has developed plans to take over Greenland and Panama by force if necessary but refused to answer repeated questions during a hotly combative congressional hearing Thursday about his use of Signal chats to discuss military operations. Hegseth's comments were the latest controversial remarks made by a member of the Trump administration about the Arctic island. The president himself has said he won't rule out military force to take over Greenland, which he considers vital to American security in the high north. The Wall Street Journal last month reported that several high-ranking officials under the U.S. director of national intelligence, Tulsi Gabbard, had directed intelligence agency heads to learn more about Greenland's independence movement and sentiment about U.S. resource extraction there. Nielsen in April said that U.S. statements about the island have been disrespectful and that Greenland 'will never, ever be a piece of property that can be bought by just anyone.'
Yahoo
27 minutes ago
- Yahoo
Individual investors invested in International Consolidated Airlines Group S.A. (LON:IAG) copped the brunt of last week's UK£724m market cap decline
The considerable ownership by individual investors in International Consolidated Airlines Group indicates that they collectively have a greater say in management and business strategy 42% of the business is held by the top 25 shareholders 15% of International Consolidated Airlines Group is held by Institutions Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. A look at the shareholders of International Consolidated Airlines Group S.A. (LON:IAG) can tell us which group is most powerful. With 59% stake, individual investors possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn). And following last week's 4.5% decline in share price, individual investors suffered the most losses. Let's delve deeper into each type of owner of International Consolidated Airlines Group, beginning with the chart below. Check out our latest analysis for International Consolidated Airlines Group Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices. International Consolidated Airlines Group already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at International Consolidated Airlines Group's earnings history below. Of course, the future is what really matters. We note that hedge funds don't have a meaningful investment in International Consolidated Airlines Group. Qatar Airways Limited is currently the largest shareholder, with 27% of shares outstanding. With 3.6% and 3.2% of the shares outstanding respectively, BlackRock, Inc. and Capital Research and Management Company are the second and third largest shareholders. On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest. Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too. While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves. I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions. Our most recent data indicates that insiders own less than 1% of International Consolidated Airlines Group S.A.. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own UK£4.3m of stock. In this sort of situation, it can be more interesting to see if those insiders have been buying or selling. The general public, mostly comprising of individual investors, collectively holds 59% of International Consolidated Airlines Group shares. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability. We can see that Private Companies own 27%, of the shares on issue. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company. It's always worth thinking about the different groups who own shares in a company. But to understand International Consolidated Airlines Group better, we need to consider many other factors. For instance, we've identified 2 warning signs for International Consolidated Airlines Group that you should be aware of. If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts. NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
