Latest news with #FutureRich
Yahoo
3 days ago
- Business
- Yahoo
Worried About Social Security in 2025? A Pro Financial Planner Shares Key Things To Know
Many Americans are feeling uneasy about the future of Social Security. While the average monthly Social Security benefit is now over $2,000, some experts also predict that the Social Security trust fund will deplete its reserves within the decade. In an episode of the 'Future Rich' podcast, Barbara Ginty, CFP, reassured listeners that while Social Security isn't going away, it does face pressures that require thoughtful planning. Read Next: Learn More: Here are some things you should know, as well as seven things to do if you're worried about Social Security. Check Your Earnings Record Ginty said to qualify for Social Security, workers need at least 40 work credits, which amounts to roughly 10 years of employment. Without meeting this minimum, they are not eligible for retirement benefits. Reviewing one's earnings record on the Social Security website regularly helps to ensure that reported income is accurate and that no credits are missing. Find Out: Know How Benefits Are Calculated Social Security calculates retirement benefits based on a person's highest 35 years of earnings. Years with no reported income, such as time spent in school, caregiving or unemployment, can reduce the monthly benefit unless replaced by higher-earning years later. 'Those zero years will fall off,' Ginty said. 'They're going to take the highest of your 35 years of earnings in which you paid into Social Security.' Understand Who Can Claim Social Security offers more than just retirement benefits. Spouses, former spouses, widows, widowers, surviving ex-spouses, minor children of deceased workers and people with disabilities may all be eligible. 'There's a few different ways you can collect on Social Security, and that's where this can get a bit confusing,' Ginty said. Understanding these different claiming options is key to maximizing lifetime benefits. 'I think it is a lot more important as a household to consider what the benefits look like and how you're going to collect. Versus a single individual, where you have only one benefit available, as a household, there's two benefits,' Ginty said. Report Your Income Workers who are paid in cash or 'off the books' and do not report their income will not accumulate Social Security credits. 'If you don't plan accordingly, you could miss out on, or you most likely will miss out on, your Social Security,' Ginty said. 'You could also miss out on Medicare, so you want to make sure you are on the books.' Ginty said that failing to contribute to the system could result in being ineligible for future benefits, including retirement, disability and survivor payments. Learn How It's Funded Social Security is a 'pay-as-you-go' program funded through payroll taxes. This means today's benefits are largely funded through payroll taxes collected from today's workers. Employees contribute 6.2% of their wages toward Social Security and 1.45% toward Medicare, with employers matching both amounts. 'Now, if you're self-employed, you are responsible for the full 15.3%,' Ginty said. 'You need to be covering both sides of that, meaning … if you are self-employed, you're the employee and you're the employer. So you have to do both sides of it.' Have a Collection Strategy Claiming Social Security as soon as benefits become available may not always be the best decision. Ginty said having a collection strategy, particularly for married couples, helps maximize total benefits over two lifetimes and secure greater financial stability in retirement. 'I do believe it is important to consider a strategy with Social Security, not to just collect as soon as you're eligible, but to think about why you're collecting and how you're collecting, and how it will affect yourself and or your household,' she explained. Don't Count on Social Security Alone Social Security was never intended to serve as a retiree's sole source of income. 'It was intended to be a supplement for retirees,' Ginty said. 'It … has never been meant to be your sole source of income. Sadly, for some retirees today, it is the single largest source of income.' Ginty said that individuals aim to save at least 15% of their income for retirement to supplement their Social Security benefits, especially given rising life expectancies and the program's future uncertainty. 'I like to see your own savings being greater than what is being mandated by the government,' Ginty said. 'Remember, it is meant to be a supplement to your retirement. You don't want it to be your single largest source of income in retirement. That's just not as comfortable.' More From GOBankingRates Warren Buffett: 10 Things Poor People Waste Money On This article originally appeared on Worried About Social Security in 2025? A Pro Financial Planner Shares Key Things To Know
Yahoo
4 days ago
- Business
- Yahoo
Worried About Social Security in 2025? A Pro Financial Planner Shares Key Things To Know
Many Americans are feeling uneasy about the future of Social Security. While the average monthly Social Security benefit is now over $2,000, some experts also predict that the Social Security trust fund will deplete its reserves within the decade. In an episode of the 'Future Rich' podcast, Barbara Ginty, CFP, reassured listeners that while Social Security isn't going away, it does face pressures that require thoughtful planning. Read Next: Learn More: Here are some things you should know, as well as seven things to do if you're worried about Social Security. Check Your Earnings Record Ginty said to qualify for Social Security, workers need at least 40 work credits, which amounts to roughly 10 years of employment. Without meeting this minimum, they are not eligible for retirement benefits. Reviewing one's earnings record on the Social Security website regularly helps to ensure that reported income is accurate and that no credits are missing. Find Out: Know How Benefits Are Calculated Social Security calculates retirement benefits based on a person's highest 35 years of earnings. Years with no reported income, such as time spent in school, caregiving or unemployment, can reduce the monthly benefit unless replaced by higher-earning years later. 'Those zero years will fall off,' Ginty said. 'They're going to take the highest of your 35 years of earnings in which you paid into Social Security.' Understand Who Can Claim Social Security offers more than just retirement benefits. Spouses, former spouses, widows, widowers, surviving ex-spouses, minor children of deceased workers and people with disabilities may all be eligible. 'There's a few different ways you can collect on Social Security, and that's where this can get a bit confusing,' Ginty said. Understanding these different claiming options is key to maximizing lifetime benefits. 'I think it is a lot more important as a household to consider what the benefits look like and how you're going to collect. Versus a single individual, where you have only one benefit available, as a household, there's two benefits,' Ginty said. Report Your Income Workers who are paid in cash or 'off the books' and do not report their income will not accumulate Social Security credits. 'If you don't plan accordingly, you could miss out on, or you most likely will miss out on, your Social Security,' Ginty said. 'You could also miss out on Medicare, so you want to make sure you are on the books.' Ginty said that failing to contribute to the system could result in being ineligible for future benefits, including retirement, disability and survivor payments. Learn How It's Funded Social Security is a 'pay-as-you-go' program funded through payroll taxes. This means today's benefits are largely funded through payroll taxes collected from today's workers. Employees contribute 6.2% of their wages toward Social Security and 1.45% toward Medicare, with employers matching both amounts. 'Now, if you're self-employed, you are responsible for the full 15.3%,' Ginty said. 'You need to be covering both sides of that, meaning … if you are self-employed, you're the employee and you're the employer. So you have to do both sides of it.' Have a Collection Strategy Claiming Social Security as soon as benefits become available may not always be the best decision. Ginty said having a collection strategy, particularly for married couples, helps maximize total benefits over two lifetimes and secure greater financial stability in retirement. 'I do believe it is important to consider a strategy with Social Security, not to just collect as soon as you're eligible, but to think about why you're collecting and how you're collecting, and how it will affect yourself and or your household,' she explained. Don't Count on Social Security Alone Social Security was never intended to serve as a retiree's sole source of income. 'It was intended to be a supplement for retirees,' Ginty said. 'It … has never been meant to be your sole source of income. Sadly, for some retirees today, it is the single largest source of income.' Ginty said that individuals aim to save at least 15% of their income for retirement to supplement their Social Security benefits, especially given rising life expectancies and the program's future uncertainty. 'I like to see your own savings being greater than what is being mandated by the government,' Ginty said. 'Remember, it is meant to be a supplement to your retirement. You don't want it to be your single largest source of income in retirement. That's just not as comfortable.' More From GOBankingRates 10 Used Cars That Will Last Longer Than an Average New Vehicle This article originally appeared on Worried About Social Security in 2025? A Pro Financial Planner Shares Key Things To Know Sign in to access your portfolio
San Francisco Chronicle
23-04-2025
- Business
- San Francisco Chronicle
How to manage your student loan before the Trump administration sends it to collections
The Biden administration tried to get a lot of student loans forgiven. The Trump administration is going in a different direction. On Monday, Secretary of Education Linda McMahon published an op-ed in the Wall Street Journal titled 'Accountability Returns to Student Loans.' In it, she announced she was ending the 'dishonest and irresponsible policy' of zero-interest student loan deferment. Leniency for student borrowers began in March 2020, at the start of the COVID-19 pandemic. Since that time, no federal student loans have been sent to collections. Several efforts by the Education Department under President Joe Biden to widely cancel student loan debt were rejected in court. An estimated 5.3 million people are currently in default on their federal student loans, and only 38% of 42.7 million borrowers are up to date on their payments, according to the department. On May 5, the Trump administration will put about 1.8 million borrowers on repayment plans, and send loans in default to collections. McMahon said the federal government could automatically garnish the wages of delinquent borrowers. When a debt goes to collections, serious financial consequences can result. Your credit score takes a major ding, which can make borrowing money for anything else, like a house or car, more expensive. It can affect whether you can rent an apartment or open accounts with certain utilities. Many employers also run credit checks on potential employees. Your current employer would be informed if the federal government started garnishing your wages. In addition to garnishment, the federal government would be able to keep any tax refund you might be owed. And unlike other types of debt, most student loans can't be discharged in bankruptcy. In short: You need to do whatever you can to avoid getting sent to collections. If you have student loans, it's time to make a game plan. Here's what to do. Figure out what you owe and how you owe it Your first step should be getting a handle on where your debt stands now, said Barbara Ginty, a certified financial planner and host of the podcast 'Future Rich.' Log onto your student loan portal and make sure your home address, email address and phone number are up to date so your lender can get hold of you if needed. Next, check your balance. A lot of things in the student loan world are in flux. You might need to recertify for income-based repayments. 'It is very important to understand what you owe and how you owe it, and make sure you're up to date on your specific situation,' Ginty said. She recently taught an online class about navigating student loans that you can access for free at this link through May 15. Explore your repayment options and alternatives Now, it's time to figure out how you'll pay it back. You might find more flexibility than you think, said Akbar Rahel, the admissions director for college admissions consulting company Prep Expert. 'Be proactive in understanding the different options,' he said. He recommended borrowers reach out to their loan servicer to find out which income-based repayment plans they qualify for or whether they're eligible for forbearance. Under forbearance, you would continue to accrue interest on your loan, but get temporary relief from having to make payments. has a 'loan simulator' that lets you enter loan types, interest rates and current balances to see different options and find one that works for you. Other alternatives you can explore include deferment, consolidation and refinancing. Your lender will be able to walk you through your options. Make a plan to pay it off Back when deferment began in 2020, many personal finance experts recommended borrowers take the money they'd normally be paying every month and set it aside for when payments started again. The smart people who did that should start digging into that balance. If you don't have that cash on hand, you have to get back to basics: Write out your monthly budget and figure out where your student loan repayments will fit in. (If you've never done this before, I have a newsletter series that shows you how.) Consumer Reports has an interactive tool that shows what different plans of attack look like in practice — including how long it will take to pay off and how much interest the loan will accrue — for a sample $37,000 student loan. Deciding on an option where you pay more in total but can stick with smaller payments right now is fine if that's what works for your life, Ginty said. 'The key is you can't do nothing. You can't hope it's going to go away,' she said. 'It's important to educate yourself on what's available and what is your new path forward.'
