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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
04-05-2025
- Business
- Yahoo
Should Gen X Really Be Worried About the State of Social Security? Experts Weigh In
Every week there seems to be new chatter about the future and fate of Social Security. For Gen Xers, who are the next in line to retire, this can cause serious anxiety about whether or not America's safety net will be there when they're ready to take it. Find Out: Read Next: Experts explained whether Gen Xers should really be worried about the state of Social Security. There is an uncomfortable truth about Social Security that people may not like to hear, according to Krisstin Petersmarck, National Social Security Advisor (NSSA) and investment advisor representative at New Horizon Retirement Solutions. 'People think that since they paid into the system they are entitled to benefits in retirement. Unfortunately, this simply is not accurate. The money you paid into the system while you are working benefits people who are receiving their Social Security benefit.' Learn More: Because of the structure of the current funding system for Social Security benefits, if it isn't overhauled in some way through policy moves, Petersmarck warned there is a real risk that Gen X recipients will see a reduction in their Social Security benefits. 'The largest factor affecting the Social Security system is that there are more workers leaving the workforce and claiming benefits than there are workers entering the workforce and paying into the system,' she explained. Additionally, wage growth has not keptup with inflation in recent years, according to Sara Levy-Lambert, head of operations at Thus, less money has been coming into the program through payroll taxes. 'These pressures are exacerbated by lengthening life expectancies, which has meant that more retirees are drawing benefits for longer lengths of time,' Levy-Lambert added. Experts disagree on the likelihood of Gen Xers getting their full benefits. Petersmarck expects that it is 'realistic' for Gen X to expect to receive their full benefits at the currently scheduled retirement age. However, Kevin Thompson, a CFP with 91 Capital Group LLC, said, 'The reduction [in benefits] is absolutely real if there is no significant change in the current funding.' Currently, the Social Security Trust could become insolvent by 2033 or 2034, which could mean a significant reduction in Social Security benefits for beneficiaries moving forward. The federal government could also raise the retirement age, forcing Gen Xers and those who come after them to work longer or save more. Another possibility would be to roll back cost of living adjustments (COLAs), Levy-Lambert said. This might 'also tamp down the growth in benefits over time, particularly if inflation continues running ahead of adjustments.' The most realistic reform to the Social Security system is raising taxes, both Petersmarck and Thompson agreed. 'A higher wage base on the taxable Social Security amount seems to be the only answer that could quickly resolve this issue,' Thompson said 'But the current administration does not seem too likely to implement that and are doing their best to take more money out of the system than they want to put into it.' The Social Security Fairness Act is one such contributor that will inevitably take more money out of the system. With the risk of Social Security benefits reduction, it may be a good idea to save more money now, Petersmarck said. 'Consider maxing out your 401(k) contributions, IRA contributions and investment accounts you fund with after-tax dollars.' Try not to rely on Social Security benefits as your sole source of income in retirement, she added. Your plan should provide income from other sources where you have saved. Fortunately, the IRS has increased the amounts you can save in these various buckets so take advantage of them, she urged. Putting your money into assets that appreciate over time — like a home, stocks or mutual funds — may also help provide a hedge against the projected deficit in Social Security benefits, according to Levy-Lambert. 'It is also a good idea for Gen Xers to stress-test financial plans as if those benefits were less after they retire. For example, planning for a buffer by tucking away some more money could offer more security if the worst happens,' she said. If you are a Schedule C-filing business of any kind, you may have an advantage, Thompson said, because you can implement some tax-saving strategies. Consult with a tax professional to see your options, he said. At the end of the day, the best bet is to plan for living on fewer Social Security benefits while hoping for the best. More From GOBankingRates 6 Used Luxury SUVs That Are a Good Investment for Retirees How Far $750K Plus Social Security Goes in Retirement in Every US Region 7 Overpriced Grocery Items Frugal People Should Quit Buying in 2025 12 SUVs With the Most Reliable Engines Sources Krisstin Petersmarck, New Horizon Retirement Solutions Sara Levy-Lambert, Kevin Thompson, 9i Capital Group This article originally appeared on Should Gen X Really Be Worried About the State of Social Security? Experts Weigh In
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
