Questions I'm Asked Over and Over Again
Q: I'm 62. My husband is 67 and getting Social Security. Can I file for spousal benefits on his record now and save my own until I'm 70?
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Miami Herald
18 minutes ago
- Miami Herald
BRN: The Social Security COLA and what it means
Since 1975, Social Security general benefit increases have been cost-of-living adjustments or COLAs (8%). Many people were disappointed when Social Security benefits only rose 2.5% at the start of the 2025. And, so far, next year's Social Security cost-of-living adjustment (COLA) does not look to be much higher. TheStreet's Maurie Backman joins Broadcast Retirement Network host Jeff Snyder to talk about the annual increase. Transcript: Jeff Snyder: This morning on BRN, the impacts of the 2025 Social Security COLA. Joining me now to discuss this and a lot more, Maurie Backman is a senior financial journalist. Maurie, happy new year. Great to see you. Thanks for joining us on the program this morning. Maurie Backman: Thanks so much for having me. I'm really excited to talk about Social Security because, you know, a new year means changes to the program, as always. Snyder: Yeah, let's talk about that, Maurie. And, you know, I think our audience is very familiar with your work because you've been on the program numerous times before. Let's talk about the cost of living adjustment or COLA for 2025. What is it and what does it mean? Backman: Sure. So years back, lawmakers decided that Social Security benefits were going to be eligible for automatic COLA. The COLA was going to be pegged to inflation so that, you know, inflation rises, benefits get a little bit of a boost. And when you think about it, I mean, it makes sense to have COLAs be automatic as opposed to needing, you know, Congress to vote in a raise to Social Security benefits year after year. It just makes the process a lot more seamless. And logically, you know, there are people who collect Social Security for 15, 20, 30 years, and the value of a dollar is going to get eroded over a period that lengthy. So we need Social Security COLAs to enable seniors to be able to maintain their buying power as living costs go up. So every year, Social Security gets a COLA. Well, actually, I shouldn't say that. Every year, Social Security is eligible for a COLA. When inflation remains flat, Social Security benefits remain flat. When there's a decrease in inflation from one year to the next, Social Security benefits also remain flat. Luckily, there's no such thing as a negative COLA. So you're not going to see your Social Security benefit decrease, thankfully, from one year to the next, even if inflation goes that route. You're only going to see your benefit stay the same or go up. Snyder: Yeah. And can you imagine, Mark, if there was a negative COLA and they started trying to reclaim Social Security benefits? Can you imagine all the people that would be lined up at the Social Security Administration? Good for them that they don't have a negative COLA. Maurie, let's talk about inflation because we have seen over the last year plus food prices increase, gasoline prices increase, other prices increase. How does this COLA factor that in and how does it compare maybe to previous years? Backman: Sure. So, you know, thankfully, inflation has cooled pretty nicely over the past year. We're not seeing the same levels of inflation that we did back in 2021 on the heels of all those stimulus policies. We're not seeing the same level of inflation as 2022. The funny thing about Social Security COLAs and inflation is that, you know, the way I've always tried to explain it is they sort of cancel each other out. So this year's COLA is 2.5%. Benefits are rising 2.5%. And a lot of seniors are, frankly, bummed about that because when we look back to recent COLAs, the year before benefits went up 3.2%. Before that, we had some of the largest COLAs in history. We had 8.7%. We had 5.9%. These were the COLAs that came about following that period of real rampant inflation that we saw following the pandemic. So, you know, a lot of people are pretty up in arms about this 2.5% COLA. Oh, it's not enough. It's such a measly little raise. But the thing to remember is that because COLAs are tied to inflation, when you have a not so generous COLA, it also means that inflation hasn't been all that bad. You kind of can't have one without the other. Right. So, you know, when seniors were seeing their benefits rise almost 6 percent or close to 9 percent, I mean, all those COLAs did was match inflation. So what you gain in one regard, you gain a higher boost, a larger boost to your Social Security benefit. You lose in the form of prices really going up a lot significantly from one year to the next. So in the past year, what we've seen is, yes, we have seen costs continue to go up. And look, I'm not retired, but I've seen my own bills increase exponentially. And I've got a family to feed. And it's stressful. It's stressful going to the supermarket and buying like six yogurts and a jug of milk and a loaf of bread. And it's like, that'll be $22.50. And it's like, what? This was like, these are groceries that I'm carrying out in my hand, you know, and a week's worth of food for my family. I mean, it seems like I'm paying more than ever. So I'm definitely sympathetic to seniors who feel that, you know, their 2.5 percent COLA is not really going to cut it for 2025. I can see where they're coming from because costs are still high. But things could also be worse. Related: Secretary Bessent's Social Security remarks spark AARP outcry Snyder: Well, they could be worse. Maurie, they could be a lot worse. I want to ask you about taxation, because how does taxation or does taxation factor into this cost of living adjustment? Does that mean anything to those directly taking Social Security? Backman: So it's a funny thing. So seniors are often shocked to learn that Social Security benefits can be taxable at the federal level. There can also be state taxes on Social Security, actually, depending on the state you live in and the amount of your total income. But the federal government can tax a portion of your Social Security benefits. And that doesn't sit well for a lot of seniors. It almost feels kind of like a double taxation, right? Because throughout our working years, we're all paying into Social Security on our wages. And, you know, the promise is that you're going to pay taxes, you're going to pay into Social Security, but then when you're older and retired, you're going to get a monthly benefit. And then it's like, hey, guess what? You're not necessarily going to keep that monthly benefit in full because once your income exceeds a certain threshold, a portion of your benefits can be taxed. Now, here's the problem. Social Security is eligible for an annual COLA, which means that benefits historically have risen from one year to the next. There have been a few years in history with a zero COLA. But for the most part, we have seen benefits rise from one year to the next. The problem is that the income thresholds that determine whether you're going to pay taxes on your Social Security benefits, those income thresholds have not increased since 1984. That's a long time ago. Snyder: I was 12. Backman: I was around. It was a long time ago. So, you know, when you kind of just then logically put those two pieces together, it's like, well, wait a minute, you know, Social Security benefits rise every year, and Social Security benefits are calculated in the formula that determines your income and that determines whether your income is high enough to have your benefits taxed, if you get what I'm saying. Basically, it's a concept called combined income. It's a factor of your adjusted gross income. It throws in any tax-exempt interest income you receive, like if you're a municipal bond investor, you might get some tax-free income. That's counted into your combined income and then also half of your annual Social Security benefit is factored into your combined income. And basically, if you're single, once your combined income is $25,000 or higher, you're going to be paying taxes on a portion of your Social Security benefits. Now, let's think about that. $25,000. I mean, you know, yes, that's factoring in half your annual Social Security benefit, but even if we want to pad that by another $10,000, $12,000, let's talk about $37,000 a year, $40,000 a year. Are you like rolling in dough at $40,000 a year? I'm not. Snyder: No, you're typically, you know, especially if you're a retiree, you're at a fixed income. And so, you know, one of the things I want to ask you about, I want to kind of close on this, is you talked about taxation now during the campaign, we're not a political show, but, you know, there were some policy preferences or suggestions about eliminating the tax on Social Security. First, Maurie, is that possible? And what would that mean to our conversation this morning about the cost of living adjustment? Related: Medicare beneficiaries quietly face looming crisis Backman: So, that's a tricky thing too, because so President-elect Trump had pledged to eliminate taxes on Social Security benefits. And a big part of me wants to say that that's a really good idea, because there's a lot of people whose income is really right above that threshold where they're liable for taxes, right? But since we just discussed that it was such a low threshold, these people cannot afford to lose some of their benefits to taxes. So, in that regard, I think eliminating taxes on Social Security benefits could be a positive thing. But then we also have to remember that Social Security doesn't just get funded by payroll taxes, it also gets funded by these taxes on benefits. Now, as it stands, we are already looking at a funding shortfall for Social Security. The program's combined trust funds are set to run dry in 2035. And at that point, benefit cuts could be on the table. So, now we have to balance the upside of not taxing Social Security so that seniors get to keep their benefits in full now versus the potential downside of, well, then what does that do to Social Security's overall financial picture? And what does that mean for benefit cuts down the line? It's a very tricky thing, and I do not envy lawmakers who have to make these decisions. And Jeff, to be clear, there's a push to not only end taxes on Social Security benefits, but also to change the way Social Security COLAs are calculated. That's a whole other issue because the reality is that the formula that's used now is not very beneficial to seniors. It really does not very accurately capture the costs that seniors specifically tend to incur. So, lawmakers really have their work cut out for them in the coming years with regard to Social Security. Snyder: They certainly do, Maurie. We've got a new Congress, a new president. Hey, look, they can't kick the can down the road too much longer because they're going to have to deal with other potential challenges. Maurie, it's always great to see you. Expert Analysis, as always. Thanks so much for joining us, and we look forward to having you back on the program again very soon. Backman: That's it. Snyder: And don't forget to subscribe to our daily newsletter, The Morning Pulse, for all the news in one place. Details, of course, at our website. And we're back again tomorrow for another edition of BRN. Until then, I'm Jeff Snyder. Stay safe, keep on saving, and don't forget, roll with the changes. Related: Jean Chatzky shares retirement tips on Social Security, Medicare The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Yahoo
36 minutes ago
- Yahoo
"Sunday Morning" Retirement Guide
As part of this year's "Money Issue" devoted to matters of retirement (airing on August 3), "Sunday Morning" presents this resource guide for those who are retired … and for those planning ahead. Government information IRS - Retirement Plan Information Contains information on estimating annual savings withdrawals and various retirement plans, including 401(k) and IRA contains information on how to manage retirement savings in the face of unexpected life events. Social Security Administration - Plan for retirement Contains tools to calculate estimated Social Security payments (including benefits received while you continue working).Also contains information on Spouse and Survivor Social Security benefits. Employment Benefits Security Administration (Part of Department of Labor) A comprehensive guide covering private retirement plans that are governed by Federal laws and guidelines in the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue a "Saving Matters" education portal, and a Retirement Savings Lost and Found Database. Does not include information on plans run by state and local government, most churches and plans for federal employees. Retirement Toolkit (Department of Labor) PDF containing a retirement planning timeline, as well as information on Medicare and links to additional informational resources. Medicare & You 2025 The official U.S. government Medicare Handbook, containing info on the different Medicare options, how to sign up, and information on Medicare Savings information AARP Retirement Portal Contains a hub of resources, including Frequently-Asked-Questions on Social Security, as well as various tools for calculating benefits. AARP: The Magazine Stories and practical tips for those at 50 and beyond. International Living Information on living your retirement years abroad. Nerd Wallet Examines retirement savings and investments by age and demographics From CBS News Moneywatch: The 4% annuity rule for retireesGen Xers' poor retirement savings numbersHow to plan for your retirement when your spouse won'tWhy retirees should buy long-term care insuranceCan you collect Social Security if you owe back taxes?3 ways seniors can supplement their Social Security nowTrump's Social Security plan would hasten insolvency, lead to bigger benefits cuts, analysis findsLiterature Here are links to books featured on this year's "Money Issue" broadcast: "50 After 50: Reframing the Next Chapter of Your Life" by Maria Leonard Olsen (Rowman & Littlefield), in Hardcover, Trade Paperback, eBook and Audio formats, available via Amazon, Barnes & Noble and Retirement Extreme: A Philosophical and Practical Guide to Financial Independence" by Jacob Lund Fisker (CreateSpace), in Trade Paperback, eBook and Audio formats, available via Amazon and Barnes & Noble"Playing with FIRE (Financial Independence Retire Early): How Far Would You Go for Financial Freedom?" by Scott Rieckens (New World Library), in Trade Paperback, eBook and Audio Formats, available via Amazon, Barnes & Noble and Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence [Revised and Updated Edition]" by Vicki Robin and Joe Dominguez (Penguin Books), in Trade Paperback, eBook and Audio Formats, available via Amazon, Barnes & Noble and Black swimmers teach others amid history of aquatic segregation Katie Ledecky breaks her own record in women's swimming Rare Grateful Dead photographs come to life 60 years after its formation 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
an hour ago
- Yahoo
Use This Step-by-Step Guide To Incorporate Social Security Into Your Retirement Planning
Nearly 52 million retired workers — or approximately 90% of Americans ages 65 and up — receive Social Security, according to the Social Security Administration. The average monthly benefit amount in June 2025 was $2,005.05, per Kiplinger, though this varies based on factors like when an individual retires and their highest 35 years of earnings. As you go about planning your retirement, it might be wise to incorporate Social Security into your plan from the get-go. That way, you'll have a clear idea of your future income and any changes you need to make to ensure you retire comfortably and on time. Read Next: Explore More: If you're not sure how to do this, this guide can help. Also see five money tips for supplementing Social Security. Figure Out the Best Time To Collect Typically, you can start collecting Social Security between the ages of 62 and 70. However, you won't get the maximum benefit amount until you reach the full retirement age (FRA). The FRA is based on when you were born but is between 66 and 67 years old. You'll generally get the highest benefit amount if you wait until you're 70 to collect. Knowing that, it helps to plan for other sources of income — or to keep working — so you can hold off on drawing from Social Security until you're 70. 'Timing your Social Security is one of the most important decisions you'll make when it comes to planning for retirement,' said Frank Davis, president of New Era Financial. Everyone's 'best' timing is subjective. To figure out yours, Davis suggested taking the following steps: Create an account and check your earnings history on the official website. Confirm your working years are listed. Pay close attention to your highest-earning years, as these can directly affect your monthly benefit. If crucial information is missing, contact the Social Security Administration to find out why. Check Out: Use a Social Security Calculator You don't have to run the numbers yourself. An online calculator can give you an estimate of your benefits amount based on when you retire and your earnings. But according to Davis, online calculators 'don't account for the full complexity of retirement planning.' He suggested looking beyond age and considering things like your overall retirement plan, budget and expected time in retirement. Find Ways To Minimize Risk According to an AARP survey, 64% are concerned they won't have enough savings to get them through retirement. 'Many people gravitate toward making decisions to help them maximize the amount they get from Social Security,' said Aaron Brask, principal of Aaron Brask Capital. However, it's also important to find ways to minimize the risk of a 'worst-case scenario.' For many, this is the risk of depleting your retirement savings and living only on Social Security benefits. If that occurs, Brask suggested having a 'higher safety net of Social Security benefits to fall back on.' Part of this could mean delaying your benefits. It also means having other sources of income in place (or even a part-time job) to get you through the intervening years — from the day you retire to the day you start collecting Social Security. Account for Inflation According to Brask, inflation is 'a known enemy of retirement security.' Unfortunately, calculators don't always factor this in. For the 12 months ending in June 2025, the annual inflation rate was 2.7%. The cumulative rate of inflation from 2000 to 2025, meanwhile, is 87.3%. This means an item that cost $100 back then would cost $187 today. While you can't know the future, it's wise to look ahead when retirement planning. Social Security benefits do get an annual cost-of-living adjustment to try to combat inflation, but it's not always enough. For 2025, for example, Social Security and Supplemental Security Income increased by 2.5%. 'Having a larger SS benefit will translate into larger inflation adjustments down the road,' Brask said. Plan as a Household Figuring Social Security into your retirement plan as a married couple can be complicated — so consider doing it together or with a professional's help. Here's an example of how spousal benefits work. 'If the first spouse that passes has the larger benefit, the surviving spouse will effectively lose their benefit and jump over to their spouse's benefit,' Brask said. 'In other words, the larger benefit will be around as long as either spouse is alive. As a result, it is often optimal for the spouse with the highest benefit to maximize it via delaying until 70.' Make Income Projections Don't rely only on Social Security to get you through; factor it in among everything else. 'Understanding your full income and budget for the year will help you make a more informed decision,' Davis said. 'This could include income from employment, dividends, pensions, withdrawals from qualified retirement accounts, spousal earnings and any other earned household income.' When in doubt, you can also consult a financial advisor or planner with expertise in retirement planning to integrate Social Security with your overarching plan. More From GOBankingRates 3 Luxury SUVs That Will Have Massive Price Drops in Summer 2025 Mark Cuban Says Trump's Executive Order To Lower Medication Costs Has a 'Real Shot' -- Here's Why 3 Reasons Retired Boomers Shouldn't Give Their Kids a Living Inheritance (And 2 Reasons They Should) This article originally appeared on Use This Step-by-Step Guide To Incorporate Social Security Into Your Retirement Planning 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
