Latest news with #middleclass
Yahoo
a day ago
- Business
- Yahoo
3 Smart Money Moves for Retirees After Trump's Big Beautiful Bill
Retirees may need to adjust their financial plans in light of changes introduced by the recently passed Big Beautiful Bill (BBB). The new legislation brings one of the largest tax cuts in history for middle- and working-class Americans, according to the White House, among other provisions affecting retirement accounts, charitable giving and estate planning. Learn More: For You: The law's impact will vary based on your income sources and assets, but certain movies could help put you in a better financial position. Here are three money moves retirees should consider, according to experts. Update Tax Withholding Right now, many retirees receive federal tax-free treatment for their Social Security benefits until the end of 2028. One change is the Senior Bonus Deduction, allowing people age 65 and older to claim an additional $6,000 tax benefit ($12,000 for couples). The decrease in taxable income means many retirees won't have to pay federal taxes on Social Security benefits, Trevor Houston, CEO at ClearPath Wealth Strategies in Dallas-Fort Worth, wrote in an email. 'Update your tax withholding,' advised Houston. 'If you no longer owe taxes on Social Security, stop letting the IRS take them out.' According to Houston, this is a great time to review your tax withholding amounts. 'Your Social Security benefit payments might still have taxes coming out even though you are no longer required to pay federal taxes on them,' he added. If that's the case, you could be giving up money unnecessarily each month. Retirees can adjust their withholding by submitting Form W-4V to the Social Security Administration or updating withholding elections with pension providers. I Asked ChatGPT What the Big Beautiful Bill Means for My Stock Investments: Consider a Roth Conversion 'Considering income tax rates will remain low for the time being, now may be a strategic time to consider a Roth conversion — moving money out of traditional IRAs and into Roth accounts,' explained Jacqueline Reeves, director of retirement plan services at Bryn Maur Trust Advisors in Boca Raton. The BBB made current income tax rates permanent for individuals, trusts and estates, which were previously due to expire at the end of 2025. 'Thoughtfully timed Roth conversion could help with lifetime tax management, and create a simpler and valuable legacy for future generations,' Reeves added. 'Roth IRAs pass to heirs income-tax-free, unlike traditional IRAs, which are taxable when distributions are taken by beneficiaries.' This is especially helpful to retirees who wish to transfer their wealth to children and grandchildren in higher tax brackets. Also, Roth IRAs are not subject to required minimum distributions (RMDs) during the account holder's life. 'Since the age for RMDs has been pushed back to 75, retirees in their early 70s now have extra years where they aren't forced to take taxable withdrawals,' Laura Cowan, estate planning attorney, entrepreneur and author at 2-Hour Lifestyle Lawyer, wrote in an email. This change is the result of the SECURE 2.0 Act, but it still creates planning opportunities for retirees. The extra time can help retirees take advantage of lower-income years, especially if combined with other provisions in the BBB to reduce their overall taxable income. 'That creates a window where you can voluntarily move money from a traditional IRA into a Roth IRA,' she added. 'You'll pay tax on the converted amount now, but then it grows tax-free for life, and your heirs won't owe income tax on it either.' Be Strategic With Your Giving 'You can now claim charitable donations up to $2,000 as a deduction, even if you don't itemize your taxes,' Houston wrote. This new above-the-line deduction allows retirees to support causes they care about while also reducing their taxable income. Unlike traditional charitable deductions that require you to itemize, this provision is available to all taxpayers, even those who take the standard deduction. 'The increased estate and gift tax exemptions will likely prompt some high-net-worth retirees to revisit their charitable giving strategies, but the motivation may shift,' explained Reeves. 'With a higher exemption amount, this opens the door for more strategic and values-based giving, where retirees may feel freer to give during their lifetimes rather than deferring gifts through their estates.' More From GOBankingRates New Law Could Make Electricity Bills Skyrocket in These 4 States I'm a Self-Made Millionaire: 6 Ways I Use ChatGPT To Make a Lot of Money 5 Strategies High-Net-Worth Families Use To Build Generational Wealth The New Retirement Problem Boomers Are Facing This article originally appeared on 3 Smart Money Moves for Retirees After Trump's Big Beautiful Bill 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
2 days ago
- Business
- Yahoo
I Asked Chat GPT How Trump's Economy Could Backfire on the Middle Class
President Donald Trump's second term has been full of economic policy changes, such as high tariffs on U.S. trading partners and moves toward big industry deregulation. While some experts feel that these moves can have longer-term positive impacts on the American economy, other experts fear that these moves could backfire on the middle class. Learn More: Read Next: While not an economic analyst, ChatGPT is good at aggregating and analyzing data, so I asked it what are some of the ways that Trump's economic policies might backfire on the middle class instead of benefitting them. Here's what it said. Tariff-Driven Price Increases The most obvious issue directly affecting consumers is that 'continued or expanded tariffs on imports (especially from China) may raise the cost of consumer goods, electronics, food, and vehicles,' ChatGPT wrote. This will impact middle-class households significantly, which tend to spend a larger portion of income on essentials. Find Out: Interest Rate Pressure If Trump pushes for more borrowing or spending while inflation stays high, the Federal Reserve Board (the Fed) could keep interest rates elevated. While this is good news for high-yield savings and money market accounts, ChatGPT warned, 'This would make mortgages, car loans, and credit card debt more expensive–burdens that disproportionately affect the middle class.' Cuts to Social Spending Another concern that ChatGPT pointed out is that to offset tax cuts or new spending initiatives, the Trump administration could pursue cuts to social programs such as Social Security, Medicare or education funding, 'which middle-income Americans rely on more than high earners.' Some Medicaid 'cuts' are already underway as a result of the recently signed One Big Beautiful Bill (OBBB), which changed eligibility criteria for Medicaid. Job Instability in Non-Tech Sectors Trump's economic policies may benefit manufacturing and energy sectors, however, ChatGPT suggested that other sectors, 'like education, healthcare, and public service–which employ millions of middle-class Americans–could face instability if funding priorities shift.' What Can Consumers Do? Other than voting or expressing concern to legislators, the only real control consumers have is to change their budgeting, spending and other financial habits. ChatGPT suggested doing such things as: Shift spending habits: Consumers may opt for cheaper alternatives, buy secondhand or prioritize domestic brands less affected by tariffs. Bulk buy or stock up early: Before tariffs hit, some consumers and businesses could stockpile goods to avoid rising prices. Use credit strategically: While not ideal long term, some households may temporarily lean on credit cards or promotional financing to manage cash flow. Emphasize budgeting and frugality: Tools like budgeting apps, cash-back programs and meal planning can help households absorb cost increases. What Policies Need Changing? While Trump's OBBB did offer some tax deductions that could help the middle class — such as no tax on tips, no tax on overtime and no tax on car loan interest — many experts feel these benefits are too small and for too brief a term (most sunset in three years) to make a real dent for the average middle-class American. ChatGPT said that to really bring financial relief, lawmakers would need to: Institute tariff exemptions or delays: Lawmakers or the administration could exempt specific industries or consumer goods from tariffs (as we've seen in the past with items like car parts and baby formula). Subsidies or tax credits: To ease the burden, Congress could offer temporary tax relief or credits aimed at middle-income earners — though this would depend on political will. Lobbying: Additionally, business groups could lobby heavily against sweeping tariffs. 'If costs rise sharply and visibly, their influence may lead to narrowed or delayed implementation.' What's Most Likely To Happen The reality is that consumers will likely get used to adjusting their spending behavior, 'cutting back on spending, opting for discount retailers and delaying big purchases' before any policy changes offer relief, ChatGPT said. As Trump's economic policies unfold, ChatGPT suggested that the middle class needs to 'stay nimble with spending, keep a close eye on inflationary trends and prepare for changes that could hit household budgets first.' More From GOBankingRates 5 Old Navy Items Retirees Need To Buy Ahead of Fall 5 Cities You Need To Consider If You're Retiring in 2025 This article originally appeared on I Asked Chat GPT How Trump's Economy Could Backfire on the Middle Class Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
2 days ago
- Health
- Yahoo
The One Thing That Makes a Middle-Class Retirement 10 Times More Expensive, According to Experts
For Americans still in the workforce with employer-sponsored healthcare plans, it's easy to take health insurance for granted. Unfortunately, this means that many middle-class workers fail to factor in health care costs when planning for their retirement. This oversight can have serious financial ramifications in their golden years. According to Fidelity's 2025 Retiree Health Care Cost Estimate, a 65-year-old retiring in 2025 can expect to spend an average of $172,500 throughout retirement on health care and medical expenses — and that's excluding long-term care expenses. The same survey indicates that 20% of Americans never considered their healthcare needs during retirement. Be Aware: Read Next: Peter Dunn, a financial expert, author and host of the 'Pete the Planner Show' podcast and radio show, said workers are often blindsided by the cost of medical coverage because their take-home pay arrives after medical expenses are deducted. 'Workers are used to having a lot covered that just isn't with Medicare,' he said, noting that retirees often fail to anticipate the costs Medicare premiums — the price of which can vary depending on their income –or the fact that dental, vision, hearing and prescription drug costs aren't fully covered by most Medicare plans. 'Middle-class couples could easily spend $6,000 [to] $10,000 a year out of pocket,' he added. That said, there are some ways pre-retirees can plan for and mitigate the impact of healthcare costs in retirement. Invest Early in Your Health It may sound obvious, but the single best way to control retirement costs is to stay healthy, said Dunn. 'If your retirement is consumed with medical expenses, it will be absolutely miserable,' he added. 'Don't smoke, keep your weight under control, walk 10,000 steps a day. Those choices matter more than you realize.' Even small improvements in fitness can reduce the risk of costly chronic illnesses like heart disease and diabetes. Check Out: Pay Off Your Mortgage Before You Retire 'Middle-class retirement is very different today than it was 30 to 40 years ago,' Dunn said, noting that the demise of company pensions and the fact that people are buying homes later in life means many workers retire without a guaranteed income, and with the added burden of mortgage payments. Entering retirement with a mortgage can put a huge strain on fixed income, especially when paired with rising healthcare costs. 'If you think your biggest expense is your mortgage, eliminating that before retirement can reduce your monthly expenses by as much as 30%,' the expert noted. Don't Sacrifice Your Retirement for College Tuition Many middle-class parents feel pressure to cover their children's higher education. But Dunn cautions against taking on student debt late in life. 'I don't think a parent in the middle class should martyr the rest of their financial life to improve someone's financial life who's just starting their career,' he explained. Trade schools or more affordable college options may make more sense depending on the student's trajectory. Invest in an HSA For those with high-deductible health plans, an health savings account (HSA) can act like a 'healthcare 401(k) [plan],' said Dunn. Contributions are tax-free, the money grows tax-free and withdrawals for qualified medical expenses are also tax-free. 'If you're eligible, it's an amazing strategy,' Dunn said. Still, he advises prioritizing retirement accounts first: 'Invest in your 401(k) before your HSA. But if you're maxing out your 401(k), an HSA should be your next stop.' Retirement planning looks different for the middle class than for wealthier households. Most Americans won't retire because they've saved a fortune, but because they've managed to lower their expenses. 'The middle class can't always save more money,' Dunn said. 'They have to reduce their cost of living. That's what gives them a shot at a comfortable retirement.' More From GOBankingRates 5 Old Navy Items Retirees Need To Buy Ahead of Fall Mark Cuban Says Trump's Executive Order To Lower Medication Costs Has a 'Real Shot' -- Here's Why This article originally appeared on The One Thing That Makes a Middle-Class Retirement 10 Times More Expensive, According to Experts
Yahoo
3 days ago
- Business
- Yahoo
I'm a Top 10% Earner: 5 Reasons I Consider Myself Middle Class
According to the most recent Current Population Survey (CPS) data, an income of $234,769 or higher lands you in the top 10% of households by income. Read More: Find Out: But in some parts of the country, even that income doesn't buy you a life of luxury. 'On paper, I earn in the top 10%, but I still feel very much middle class,' said Julian Merrick, a marketing consultant and founder of Supertrader. 'I'm careful with money, but the price of everyday things keeps going up — whether it's school fees, healthcare, or even basic services.' Merrick isn't alone in feeling middle class despite a nominally high salary. Many earning $200,000 or more say they still feel stuck in the rat race. Here's why. Coastal City Housing Costs Merrick lives in New York City, where the average home costs $797,519 according to Zillow. Some cities cost even more. 'Living in an 'elite' zip code can distort your perception of what it means to be well off,' said Jeremy Gurewitz, cofounder of Solace Health. He lives in San Francisco, where Zillow pegs the average home price at $1,291,622. 'A middle-of-the-road three-bedroom home close enough to tech hubs for a reasonable commute can cost well over $1.5 million. That level of overhead doesn't leave much room for luxury or financial freedom. Success, for me, isn't synonymous with comfort.' Discover Next: Lingering Student Loans Many higher earners still carry proportionately high student loan bills. Gurewitz attended the Wharton School of Business at the University of Pennsylvania, which estimates its annual cost of attendance at more than $95,000. Multiply that by four years for an undergraduate degree, and graduates can find themselves owing nearly $400,000 — more than the cost of the average U.S. home. High Child Care Costs In San Francisco, puts the average monthly child care cost at $3,537. Two children under school age can cost more than $7,000 a month in child care alone. 'In an area like San Francisco, $200,00-plus doesn't go that far when you have to factor in a mortgage, child care, student loans, and the extreme cost of other essential services like healthcare, insurance, or even just the grocery store,' said Gurewitz. College Savings Most parents earning top 10% salaries want to help their children pay for college — even if they are still paying off their own student loans. 'You're planning for college, saving for retirement, and trying to build a safety net,' Merrick said. 'By the time all that's factored in, there's not as much leftover as you'd think.' Retirement Planning Takes a Bite The other part of that future planning is, of course, retirement. 'We aim to max out our retirement contributions each month,' said Gurewitz. 'My definition of wealth involves time freedom and generational stability, neither of which seems assured at this point. I still check menus for prices and pause before booking a vacation. I rent a mid-range SUV, still budget carefully, and save rather than splurge.' Careful budgeting is a recurring theme among these higher — but not superstar — earners. Gurewitz and Merrick might have larger income lines on their budget than the average American, but they also have larger expenses like mortgages, childcare, and student loan payments. And when you have to track every dollar you spend, you don't feel rich — you feel middle class. More From GOBankingRates 5 Old Navy Items Retirees Need To Buy Ahead of Fall 5 Types of Cars Retirees Should Stay Away From Buying This article originally appeared on I'm a Top 10% Earner: 5 Reasons I Consider Myself Middle Class
Times
3 days ago
- Lifestyle
- Times
Is this TV's most facile idea for a show yet?
I realise, from correspondence, that I am not the only person in the country suffering from kitchen angst. Thousands, perhaps millions, of you are likewise afflicted. Materialistic saddos who retire each night wondering if they will ever be able to afford an Ilve Majestic dual fuel Milano 150 Range cooker — and, equally, where to put it if one day that scratchcard pays up £19,995. I remember my mum's delight in finally getting a fridge (1968) and a year later an automatic washing machine. The kitchen has taken on a different meaning these days: it is no longer sufficient to have a narrow, noisome, utilitarian corridor. Today it needs to reflect our commitment to eating as the premium act of conspicuous consumption — and so in middle-class homes kitchens have become vast basement cathedrals to food and showing off. Our secretary of state for energy and climate change, Ed 'Net Zero' Miliband, actually has two kitchens in his London home, but when I last saw the photos it didn't look to me like he'd ever cooked in them. That's class, that is. Two kitchens and he ignores them both.
