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Yahoo
03-08-2025
- Business
- Yahoo
Financial Planners: 4 Changes We Anticipate for Social Security in 2025 and Beyond
Social Security is the nation's largest social program, providing benefits to more than 70 million people. With a program that size, changes are inevitable. However, forecasting those changes is tricky because only Congress can enact them, noted Christine D. Moriarty, a certified financial planner (CFP) and owner of MoneyPeace, a financial wellness consultancy. Moriarty and other financial planners recently shared their thoughts on prospective changes to the program with GOBankingRates. Check Out: Read Next: Cost-of-Living Adjustment Beneficiaries look forward to cost-of-living adjustments each year. While a COLA is not guaranteed, it is likely, Krisstin Petersmarck, president and founder at New Horizon Retirement Solutions, told GOBankingRates. The adjustment is based on the consumer price index, which measures inflation, for the third quarter of the year. It goes into effect for December payments, which recipients receive in January. The 2025 COLA was 2.5%. The 2026 COLA should be announced in October. See More: Digital Social Security Cards 'In 2025, we can anticipate digital Social Security cards being introduced as an option versus the traditional paper card,' Petersmarck said. According to the Social Security Administration, digital Social Security numbers will give Americans a secure and convenient way to display their SSNs and access their numbers if they forget them or lose their paper Social Security cards. The SSA expects digital SSNs to be available early this summer. ID To Apply For Benefits 'It is expected that individuals applying for Social Security benefits will need to show their ID to prove their identity to reduce fraud,' Petersmarck said. Currently, people applying for retirement benefits online answer a series of questions to verify their identities. Steps To Save Social Security 'People are worried about changes that might threaten their benefits, such as solutions to address trust fund depletion,' Petersmarck acknowledged, referring to the SSA's estimate that the trust fund used to pay benefits is projected to be depleted in 2033. She expects Congress to address the funding issues within the next couple of years. Mark Gelbman, a financial advisor and owner at Strategic Wealth Solutions, told GOBankingRates that Congress could pursue some common-sense solutions within that time frame. 'One option would be for Congress to remove the current tax limit on Social Security taxes. For 2025, any income above $176,100 is not taxed for Social Security. 'There have also been proposals to create a donut hole where, once you hit the income cap, you wouldn't have to pay into the program again until you make more than $400,000. Every dollar earned over that amount would be taxable.' Gelbman continued, 'Congress could also look into raising the retirement age. Increasing the age of full retirement would result in Social Security having to pay less for each beneficiary.' Moriarty is less optimistic about a forthcoming solution. 'If history is an indicator,' she said, 'the dire program changes needed to protect [against] a decrease in benefits will happen at the ninth hour, not in the next year or two.' More From GOBankingRates How Much Money Is Needed To Be Considered Middle Class in Your State? This article originally appeared on Financial Planners: 4 Changes We Anticipate for Social Security in 2025 and Beyond 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
CBS News
30-07-2025
- Business
- CBS News
5 ways to maximize your CD returns this August, according to experts
While certificate of deposit (CD) rates have dropped slightly over the last year, today's rates are still attractive, especially compared to historical levels, with many banks offering yields above 4% across various terms. This has been a welcome shift for savers who endured much less appealing CD returns when interest rates were at historic lows. But recent inflation spikes in May and June have introduced new uncertainty into the economic environment and left questions about the Federal Reserve's next moves. While current CD interest rates are compelling, any shifting economic conditions that occur could impact future yields from interest-bearing accounts as policymakers respond to the changing trends. Given the ongoing economic uncertainties, strategy matters if you're looking to maximize your CD returns this August. And, financial experts say certain moves can help you squeeze the most value from today's CD market while positioning yourself to avoid costly missteps. Compare your CD options and lock in a great rate today. "If you can find a CD offering 5% or more, it's worth locking in [some] of your cash now," says Christopher L. Stroup, a certified financial planner and president of wealth management company Silicon Beach Financial. Below are several expert-backed strategies to help you get the most out of your CDs this month. Krisstin Petersmarck, an investment advisor representative at financial services firm New Horizon Retirement Solutions, encourages shopping online for the best CD rates. "Often, online banks [give] better rates [than traditional ones] because they have no brick-and-mortar expenses," Petersmarck says. Don't rely on one comparison website when hunting for CD account rates, though. Mark Sanchioni, senior vice president and chief banking officer at Ridgewood Savings Bank, recommends referencing several because not all sites will show every bank. Some comparison tools also miss special promotional rates that could enhance your earnings. Beyond the headline rate, examine the details before committing your money. Sanchioni recommends checking reviews and understanding withdrawal limitations. Find out how much you could earn with the right CD account now. Right now, "we're favoring six to 12-month terms, which are long enough to lock in a strong yield, but short enough to preserve flexibility if rates drop or better opportunities [come up]," Stroup says. But Petersmarck emphasizes that the ideal term length depends on your circumstances and how long you can have your money invested in a CD. "Have an emergency fund, so you don't have to turn in the CD early to access the money," Petersmarck advises. For larger cash positions, Stroup advises spreading money across several CD terms to reduce risk while still capturing today's higher rates. CD laddering involves spreading your money across more than one CD with different terms and maturity dates. This way, you're not locked into a single rate if conditions change. Stroup offers a concrete example of splitting a $10,000 investment into three CDs: When each CD matures, you can reinvest the funds into new CDs at current yields. "The CD ladder concept allows you to always have one of your CDs a year or less from maturity, helping to mitigate your liquidity risk," Sanchioni explains. He recommends pairing your ladder with a savings or money market account for cash needs that can't wait for the next maturity date. "Don't let your CD auto-renew," Stroup says. When your CD automatically rolls over, you might miss out on better rates available elsewhere or even from your existing bank on new CDs. "Instead, set a reminder [a month] before maturity [and] use that window to shop for new rates and compare terms." If you're hesitant about locking your money away or think rates might climb higher, specialty CDs could be worth exploring: Before choosing a CD, Sanchioni encourages clarifying the following: Sanchioni also warns against waiting too long to use a bump-up feature. "If you open a two-year bump-up CD [account] and wait 18 months to bump the rate, you only enjoy the higher rate for six months," Sanchioni says. "Now is a good time to consider CDs as the rates are still attractive," Petersmarck says. Before committing funds, though, consult a trusted financial advisor. They can help you weigh CD options alongside your broader money goals and find the right strategy for your situation.
Forbes
11-07-2025
- Business
- Forbes
Trump's New Tax Law Could Cut Social Security Taxes For Millions
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations. A new tax break aimed at seniors may lighten the load on retirees' Social Security income, but it's not as sweeping or permanent as some headlines suggest. Tucked inside the 'One Big Beautiful Bill,' signed into law by President Donald Trump on July 4, 2025, is a $6,000 tax deduction for individuals aged 65 and older. For couples filing jointly , both partners can claim the deduction if eligible, reducing taxable income by up to $12,000. The benefit is set to run from 2025 through 2028. It doesn't rewrite how Social Security is taxed, but by trimming taxable income on paper, the law could pull millions of retirees below the threshold (below $25,000 in income for individuals or $32,000 for couples), where those benefits get taxed, at least for now. About 64% of seniors already don't pay taxes on Social Security, according to the White House. This bill raises that number to 88%. Despite a White House claim that the law means 'no tax on Social Security,' the fine print tells a different story: The break applies to around 88% of seniors, not all. And it doesn't eliminate taxation on Social Security benefits entirely. 'Low-income retirees are already tax-exempt. So, it is reasonable to say the policy provides relief to middle and upper-middle-class households,' says Krisstin Petersmarck, president and founder at New Horizon Retirement Solutions. For many middle-income retirees, this new deduction could result in smaller tax bills over the next few years. But eligibility hinges on your income. To claim the full $6,000 deduction: Single filers must have modified adjusted gross income (MAGI) under $75,000 Married couples must stay below $150,000 Above those limits, the deduction phases out—reduced by six cents for every dollar over the cap—and disappears entirely once income hits $175,000 (or $250,000 for couples) If you're married and only one spouse receives Social Security, you'll generally benefit more by filing jointly, but it depends on each spouse's age. Here's how it breaks down: The new $6,000 senior deduction only applies to individuals who are 65 or older. For couples filing jointly, each spouse must be 65 or older to claim the full $12,000 deduction (that's $6,000 per eligible spouse). If only one spouse is 65 or older, you can still claim just the $6,000—but only if you file jointly. Filing separately often means more of your Social Security gets taxed, unless you lived apart the entire year. You'll also benefit from the higher income threshold for Social Security taxation when filing jointly: $32,000 versus $25,000 for individuals. If even one spouse is 65 or older, filing jointly lets you claim the deduction and potentially reduce taxes on Social Security, especially if your combined income stays below the phaseout range. Here's how that plays out in practice: A married couple, both over 65, with $120,000 in income, could deduct: The standard deduction ($31,500 for joint filers) Age-related additional deduction ($3,200) The new bonus ($6,000 each) That's $46,700 in total deductions, significantly reducing their taxable income and potentially removing much, if not all, of their Social Security benefits from the tax equation. While the law doesn't directly change how Social Security benefits are taxed, it does make it less likely that retirees will owe taxes on those benefits. That's because the new $6,000 deduction for seniors lowers your total taxable income. On paper, at least. And Social Security benefits are only taxed if your income crosses certain thresholds. So, by subtracting $6,000 (or $12,000 for couples) from your income, you might fall below the level where Social Security starts getting taxed. For example, a couple with $120,000 in income could now deduct up to $46,700 under the new law, potentially reducing the amount of Social Security that's taxable, or eliminating that tax entirely. In short: Social Security tax rules haven't changed, but fewer people will be affected by the taxes. 'Even though the law has passed, it's smart to stay vigilant. Laws can change again, especially if deficits grow,' says Paul Miller, CPA and founder of Miller & Company LLP. 'For now, retirees should revisit their tax projections and possibly adjust estimated tax payments or withholding.' There are a few fine-print rules to be aware of: Married couples must file jointly to claim both deductions. You must include a valid Social Security number for the person receiving the deduction. Foreign income exclusions from sections 911, 931 and 933 of the tax code must be counted in MAGI. While the deduction is pitched as a broad benefit, experts say it primarily helps a specific slice of retirees: middle- to upper-middle-income households that were already paying significant taxes on their benefits. 'This mostly helps retirees who were paying significant taxes on their Social Security to begin with,' Miller says. 'Lower-income retirees already didn't pay much tax on benefits, so the largest dollar benefits skew toward the middle of the income distribution.' Under current rules, beneficiaries must pay taxes on a portion of their Social Security if their income exceeds certain thresholds: Individuals with income below $25,000 (or $32,000 for couples) pay no tax Income between $25,000–$34,000 (or $32,000–$44,000 for couples): up to 50% of benefits may be taxable Income above $34,000 (or $44,000 for couples): up to 85% of benefits may be taxed According to the Center on Budget and Policy Priorities, these taxes will generate nearly $1 trillion over the next decade, revenue that supports both the Social Security and Medicare trust funds. Without those taxes, some experts warn, the funding shortfall for Social Security could deepen. 'This deduction provides relief now, but if it's extended or expanded in the future, Congress will need to find a way to pay for it,' says Ash Ahluwalia, managing director and head of Social Security planning at OneTeam Financial. 'Otherwise, it adds to an already massive shortfall.' Critics also point out that, because the tax break is temporary, it adds to the deficit without boosting long-term economic growth. Unlike permanent tax policy changes that might influence retirement behavior or savings rates, short-term deductions like the Senior Bonus offer limited economic ripple effects, while still reducing federal revenue in the near term. The deduction kicks in for tax year 2025, meaning retirees will first claim it when filing in early 2026. But the benefit sunsets in 2028, unless reauthorized by Congress. That timeline leaves retirees with a short window of opportunity and some uncertainty. 'If the law is eventually reversed or modified, that adds more confusion,' Miller says. 'So while it simplifies taxes in the near term, because fewer retirees will owe tax on Social Security. It complicates long-term planning if you don't know whether this policy will last.' Here's how experts suggest retirees and pre-retirees prepare: Revisit your withdrawal strategy. With Social Security taxed less, you may want to draw more from taxable retirement accounts instead of Roths. 'It's a good idea to sit down with a tax advisor to model different scenarios,' Miller says. With Social Security taxed less, you may want to draw more from taxable retirement accounts instead of Roths. 'It's a good idea to sit down with a tax advisor to model different scenarios,' Miller says. Reassess estimated payments. If you're used to pre-paying taxes on your benefits, you might reduce those payments during the deduction years. If you're used to pre-paying taxes on your benefits, you might reduce those payments during the deduction years. Don't let short-term savings sway long-term decisions. 'When to file for Social Security is a long-term decision and should not be swayed by short-term tax relief,' Ahluwalia says. 'Claiming early still reduces your monthly benefit permanently.' For some, however, the new deduction could make earlier claiming slightly more attractive. 'Now that benefits are tax-free for most people, claiming earlier could result in more spendable dollars each year,' Miller adds. 'But you still need to weigh that against the lifetime tradeoffs.' The law may offer near-term relief, but it raises long-term questions about the health of Social Security itself. According to the 2025 Social Security Trustees Report, the program's main trust fund is projected to be depleted by 2033. Without intervention, benefits would be cut by 23% across the board. And while this projection hasn't worsened from the prior year, other legislative changes—like the Social Security Fairness Act—have already increased the shortfall. Making Social Security benefits less taxable may seem like progress to many retirees, but critics warn that it could erode the program's foundation. 'Scaling back taxation would primarily help higher-income beneficiaries,' notes the Center on Budget and Policy Priorities. 'That would make the system less progressive and require either payroll tax increases or benefit cuts to balance the books.' Demographic shifts compound the challenge: In 1960, there were more than five workers paying into the system for every beneficiary, according to a report by the Bipartisan Policy Center . Today, it's just three-to-one, and falling. Meanwhile, Social Security taxes cover a smaller portion of total income than they once did: 83% today, compared to 90% in 1983. So far, lawmakers haven't announced how they'll replace the revenue lost by this deduction, should it be made permanent. Until then, experts urge caution. 'Temporary tax relief is welcome, but it doesn't solve the real problem,' Ahluwalia says. 'And the longer Congress waits to act, the more painful the fix will be.' *Editor's Note: This story was amended on July 11 to add further details on filing jointly or separately.
Yahoo
31-05-2025
- Business
- Yahoo
Should Millennials Really Be Worried About the State of Social Security? Experts Weigh In
Millennials have enough on their plate — rising housing costs, student debt, higher interest rates, etc. Now they are adding Social Security to the list of concerns. Learn More: For You: For years, headlines have warned that the Social Security program is running out of money, leaving many wondering if there will be anything left when they retire. Social Security's trust fund may potentially dry up in the 2030s, but even if they do, payroll taxes will continue to cover a majority of Social Security payments. Even so, experts say changes are coming. Here's what to know about the future of the Social Security program and how to prepare for retirement. 'It is no secret that the Social Security trust fund is facing trouble. Current projections say that the fund will be able to pay 100% of benefits through 2035. Then, if Congress does not act, benefits will be reduced by about 21 to 22%,' Krisstin Petersmarck, National Social Security Advisor (NSSA) and investment advisor representative at New Horizon Retirement Solutions in Bloomfield Hills, Michigan, wrote in an email. Social Security is funded primarily through payroll taxes from current workers, but as the Baby Boomer generation continues to retire, the number of beneficiaries is outpacing the number of workers paying into the system. 'The fact is, more people are leaving the workforce than entering it,' Petersmarck added. 'So, millennials should be concerned.' According to the Social Security Administration's most recent Trustees Report, there were 2.7 workers per beneficiary in 2023. By 2040, the ratio is projected to drop to 2.3 when the baby boomer generation has largely retired and will continue to decline gradually thereafter due to longer life expectancies. Millennials still need to prepare for retirement, with or without Social Security. The SSA has stated that Social Security only replaces about 40% of annual pre-retirement earnings on average. 'I am a financial advisor, building an independent planning practice designed for millennials,' explained Jonathan Ford Jr., president, founder and investment advisor at JFJ Advisory Services in Morrow, Ohio. 'I help every one of them plan for retirement as if Social Security won't be around forever.' Ford tells his clients that they must take responsibility for their own retirement. 'If necessary changes are made to preserve Social Security, then that would just be the cherry on top. We could consider early retirement or spending more and enjoying more during retirement,' he stated. 'It's a classic case of 'plan for the worst, hope for the best.'' As for steps millennials can take right now, Ford recommends an employer 401(k) as a starting point, especially if they offer a match. If not, then an IRA is another option he suggests that offers tax savings. 'Time will be any young investor's most valuable asset,' Ford noted. 'If they are proactive and start saving now, then they won't have to worry when they get to retirement. Even saving a small part of your paycheck routinely can add up over time.' More From GOBankingRates 10 Unreliable SUVs To Stay Away From Buying 5 Types of Cars Retirees Should Stay Away From Buying This article originally appeared on Should Millennials Really Be Worried About the State of Social Security? Experts Weigh In 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
Yahoo
28-04-2025
- Business
- Yahoo
Best CD Rates This Week: Don't Miss Out on APYs as High as 4.50%
A certificate of deposit can be a smart way to protect your money from the ups and downs of the market. Your rate is fixed when you open a CD so your returns will stay the same regardless of what happens in the economy. At a time when tariffs, inflation and recession worries fill the news, this peace of mind can be especially valuable. Today's top CDs offer annual percentage yields as high as 4.40% -- more than three times the national average for some terms. But we've seen rates tipping downward in recent weeks so if you're thinking of opening a CD, doing it sooner rather than later could be a wise move. Experts recommend comparing rates before opening a CD account to get the best APY possible. Enter your information below to get CNET's partners' best rate for your area. CDs offer many benefits, including: Low risk: CDs held by an FDIC-insured bank or NCUA-insured credit union are protected for up to $250,000 per depositor, institution and account category. That means that if your bank fails, your money is safe. Other investments, like stocks, may potentially yield higher returns over the long term, but they're also volatile, which means you could lose money at any time. Guaranteed returns: Your APY is locked in when you open a CD, unlike with savings accounts, where interest rates can vary at any time. A CD's fixed rate makes it easy to calculate how much interest you'll earn over time and protects your funds from rate drops after you open your account. Competitive rates: Traditional savings accounts offer minimal APYs, sometimes as low as 0.01%. Today's top-yielding CDs have APYs of 4.50% or more, which can make a difference in your interest earnings and help your money keep pace with inflation. Barrier to access: Many CDs, however, charge an early withdrawal penalty if you take your money out before the term ends. This can help you resist the urge to dip into your funds before you need them. CDs have plenty of perks, but they're not always the right fit for your needs. "Right now, both a CD and a high-yield savings account are good options but you must remember a CD has a fixed term, whereas an HYSA offers more flexibility to access your money," said Krisstin Petersmarck, a financial advisor at New Horizon Retirement Solutions. "The tradeoff is CDs offer a higher interest rate for your money to be locked in versus HYSAs that offer a lower interest rate." To determine if a CD is the right choice for your money, ask yourself the following questions: When will you need your funds? You'll pay a penalty if you take money out of a CD before it matures. In contrast, you can withdraw cash from a savings account at any time, free of charge (as long as you mind any monthly withdrawal limits). How much do you have to deposit? Some CDs require a minimum deposit to open an account, typically $500 to $1,000. If you can't find an account with an attractive APY for the amount you want to deposit, try looking into a high-yield savings account with a low or no minimum deposit. Do you want to add money over time? Most CDs (though not all) only allow a one-time deposit. If you'd like to regularly add money to your savings over time, consider a high-yield savings account. Do you need some discipline? If you're worried you'll be tempted to tap into your savings before you need it, a CD imposes an early withdrawal penalty, which can help give you reviews CD rates based on the latest APY information from issuer websites. We evaluated CD rates from more than 50 banks, credit unions and financial companies. We evaluate CDs based on APYs, product offerings, accessibility and customer service. The current banks included in CNET's weekly CD averages include Alliant Credit Union, Ally Bank, America First Federal Credit Union, American Express National Bank, Barclays, Bask Bank, BMO Alto, Bread Savings, Capital One, CFG Bank, CIT, CommunityWide Federal Credit Union, Discover, EverBank, First Internet Bank of Indiana, First National Bank of America, Forbright, LendingClub, Limelight Bank, Marcus by Goldman Sachs, MYSB Direct, NexBank, Quontic, Rising Bank and Synchrony. *APYs as of April 28, 2025, based on the banks we track at CNET. Earnings are based on APYs and assume interest is compounded annually. Sign in to access your portfolio
