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Yahoo
20-06-2025
- Business
- Yahoo
Here's What the Average Social Security Payment Will Be This Summer
The average monthly Social Security benefit for retired workers topped $2,000 for the first time in the agency's nine-decade history. Find Out: Read Next: While Social Security remains a vital income stream for millions of Americans, inflation, cost-of-living adjustments and rising healthcare costs could erode the purchasing power for older adults who rely on Social Security alone. Here's what beneficiaries need to know about their payments this season to make the most out of every dollar. According to the latest data from the Social Security Administration, as of summer 2025, the average monthly Social Security benefit for retired workers is $2,002.39. This marks an increase from roughly $1,917 a year ago, reflecting the 2.5% cost-of-living adjustment (COLA) that took effect in January. 'While those numbers may not seem like a huge jump, every dollar counts when you're on a fixed income,' said Oscar Skjaerpe, certified financial planner (CFP) at ProVise Management Group. 'It's a reminder that even modest COLAs can add up over time, but they still need to be part of a bigger plan.' Be Aware: Cost-of-living adjustments (COLAs) are designed to help Social Security payments keep pace with inflation. While the 2025 COLA of 2.5% has kept pace with average inflation so far, retirement experts said it still falls short of covering rising expenses, such as healthcare and insurance. 'The average COLA for Social Security over the last 30 years was about 3.2%.,' said Krisstin Petersmarck, National Social Security Advisor (NSSA) and investment advisor representative at New Horizon Retirement Solutions. Petersmarck said that while COLA is designed to help benefits keep pace with inflation, other factors, like rising Medicare Part B premiums, may strain household budgets. 'In 2025, the COLA increase was 2.5% and the average inflation rate so far is between 2.4% and 2.8%,' Petersmarck said. 'So, the COLA increase based on stats has been keeping pace. However, the opinion of most people receiving Social Security benefits is that it is not keeping pace.' Even with the 2.5% COLA increase, factors like Medicare premiums, taxes and income brackets can reduce the actual amount retirees receive. 'The main driver of this year's benefit increase is the 2.5% COLA,' said Jim Davis, CFP and senior wealth advisor with Aspen Wealth Management. 'But rising Medicare Part B premiums and potential tax implications can quickly erode those gains.' Most retirees have their Medicare Part B premiums automatically deducted from their monthly Social Security payments. When these premiums increase, as they often do year over year, they can offset any cost-of-living adjustment and shrink the net amount that actually lands in a retiree's bank account. 'For high-net-worth retirees, a larger portion of Social Security benefits may be taxable and higher Medicare premiums (IRMAA surcharges) can further reduce net payments,' Davis said. 'It's a reminder that even 'guaranteed' income streams come with moving parts, especially for those with more complex financial pictures.' While the average Social Security benefit for retired workers has risen to just over $2,000 a month in 2025, many retirees could find that it doesn't stretch as far as expected. 'Social Security was designed to be a safety net, not a hammock. Many retirees think they can count on it as their primary income source when it's really meant to support and not represent the majority of a broader retirement income plan,' said Shane O'Hara, CFP and certified private wealth advisor (CPWA) at ProVise Management Group. 'With inflation still higher than the Fed's goal of 2% annually and Medicare premiums often increasing faster than the cost-of-living adjustments (COLAs), retirees should be cautious about assuming their Social Security benefit will stretch as far as it did for their parents,' O'Hara added. Experts recommended viewing Social Security as a stable foundation, not the whole strategy. 'In the world of hiking and dressing properly to reach the mountain's summit, you can think of Social Security like your base layer: dependable, but not the whole outfit,' O'Hara explained. 'You need to layer on income from savings, investments and potentially a pension to weather the rising cost of living, unexpected expenses or even a surprise travel opportunity because retirement should include some fun too.' More From GOBankingRates 25 Places To Buy a Home If You Want It To Gain Value This article originally appeared on Here's What the Average Social Security Payment Will Be This Summer 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
