A Risky Plan for Social Security
The Cassidy-Kaine plan may get a warm reception from the Trump administration, which also favors a sovereign wealth fund and pledges never to cut Social Security benefits. But if the rescue plan sounds too good to be true, that's because it is.
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Miami Herald
5 hours ago
- Miami Herald
Suze Orman gives new Social Security reality check
There are millions of older Americans today who collect a monthly Social Security check in retirement. And without those benefits, many would not be able to manage their expenses. Retiring on Social Security alone is no easy feat, though. Related: Warren Buffett sends blunt message on Social Security Average earners can expect Social Security to replace about 40% of their pre-retirement wages. Most retirees need roughly twice that amount of income to keep up with their expenses -- especially these days, with inflation staying stubbornly elevated. Thankfully, many retirees do manage to secure income outside of Social Security. That income can come in the form of an IRA or 401(k) balance, a pension, investments, or earnings from part-time work. Don't miss the move: Subscribe to TheStreet's free daily newsletter There's a downside to having income outside of Social Security, though. Retirees with other income streams often pay taxes on their Social Security benefits due to an outdated rule. Recently, the One Big Beautiful Bill Act (OBBBA) was passed, and with it came a big tax break for seniors. But financial guru Suze Orman warns that this change doesn't necessarily mean that retirees will get out of paying taxes on Social Security. President Trump has been trying to do away with taxes on Social Security benefits since taking office. But there's been pushback. The reality is that Social Security relies on the taxes collected on benefits for revenue. Related: Some seniors in line for huge Social Security tax break As it is, Social Security is facing the strong possibility of benefit cuts in under a decade as the program's trust funds are continuously tapped. If taxes on Social Security were to be eliminated, it could drive the program even closer to insolvency. Instead, what lawmakers did was provide a $6,000 bonus tax deduction for Americans 65 and older -- a deduction that will, in many cases, spare retirees who otherwise would've paid taxes on their Social Security from losing that portion of their benefits. However, Orman insists that the new rules enacted under the OBBBA do not come close to exempting all retirees from being taxed on Social Security. And many seniors will, inevitably, get left out in the cold. Social Security taxes apply to single tax-filers with a combined income of more than $25,000, or $32,000 for joint tax-filers. Combined income is the total of: Adjusted gross incomeTax-exempt interest income50% of yearly Social Security benefits If a threshold of $25,000 for single retirees or $32,000 for couples seems absurdly low, it is. But these thresholds were established decades ago and were never adjusted for inflation. Related: Dave Ramsey raises red flag over Social Security There's a reason for that. Lawmakers want retirees who can afford taxes on Social Security benefits to keep paying them. The program needs that critical revenue to survive. For this reason, Orman cautions Social Security recipients not to fall into the trap of assuming that they're automatically exempt from paying taxes on their benefits. "The rules on taxation of Social Security benefits were not changed," she said recently on her podcast. Moreover, Orman stressed that the rules and thresholds for combined income have not budged under the OBBBA. Put another way, the new $6,000 tax break for seniors is not tied to Social Security in any way. Another hidden surprise? Not all seniors will get that $6,000 deduction, since it phases out at higher income levels. Not only that, but the $6,000 deduction is only in place until 2028. Beyond that point, who knows? More on retirement: Dave Ramsey offers urgent thoughts about MedicareJean Chatzky shares major statement on Social SecurityTony Robbins has blunt words on IRAs,401(k)s The White House has touted its recent $6,000 tax break as "the largest tax break in history for America's seniors." But Orman says Social Security recipients shouldn't be fooled. Many will ultimately continue to be taxed on their benefits. And even those who get the aforementioned tax break may soon enough see it go away. Related: Warren Buffett sends White House blunt message on the economy The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
NBC News
5 hours ago
- NBC News
Vast majority of U.S. adults stressed about grocery costs, AP-NORC poll finds
NEW YORK — The vast majority of U.S. adults are at least somewhat stressed about the cost of groceries, a new poll finds, as prices continue to rise and concerns about the impact of President Donald Trump's tariffs remain widespread. About half of all Americans say the cost of groceries is a "major" source of stress in their life right now, while 33% say it's a "minor" source of stress, according to the poll from The Associated Press-NORC Center for Public Affairs Research. Only 14% say it's not a source of stress, underscoring the pervasive anxiety most Americans continue to feel about the cost of everyday essentials. Other financial stressors — like the cost of housing or the amount of money in their bank accounts — are also broadly felt, but they weigh more heavily on younger Americans, who are less likely than older adults to have significant savings or own property. The survey also found that about 4 in 10 Americans under age 45 say they've used what are known as "buy now, pay later" services when spending on entertainment or restaurant meals or when paying for essentials like groceries or medical care. Adam Bush, 19, based in Portland, New York, is one of those younger Americans who has used pay-later services for things like groceries or entertainment. Bush works as a welder, fabricating parts for trucks for Toyota, and makes under $50,000 per year. "I just keep watching the prices go up, so I'm looking for the cheapest possible stuff," he said. "Hot pockets and TV dinners." Everyone is stressed about groceries Groceries are one of the most far-reaching financial stressors, affecting the young and old alike, the poll finds. While Americans over age 60 are less likely than younger people to feel major financial anxiety about housing, their savings, child care, or credit card debt, they are just as worried about the cost of groceries. Esther Bland, 78, who lives in Buckley, Washington, said groceries are a "minor" source of stress — but only because her local food banks fill the gap. Bland relies on her Social Security and disability payments each month to cover her rent and other expenses — such as veterinary care for her dogs — in retirement, after decades working in an office processing product orders. "I have no savings," she said. "I'm not sure what's going on politically when it comes to the food banks, but if I lost that, groceries would absolutely be a major source of stress." Bland's monthly income mainly goes toward her electric, water and cable bills, she said, as well as care of her dogs and other household needs. "Soap, paper towels, toilet paper. I buy gas at Costco, but we haven't seen $3 a gallon here in a long time," she said. "I stay home a lot. I only put about 50 miles on my car a week." According to the poll, 64% of the lowest-income Americans — those who have a household income of less than $30,000 a year — say the cost of groceries is a "major" stressor. That's compared with about 4 in 10 Americans who have a household income of $100,000 or more. But even within that higher-income group, only about 2 in 10 say grocery costs aren't a worry at all. Women and Hispanic adults are especially economically anxious Housing is another substantial source of worry for U.S. adults — along with their savings, their income and the cost of health care. About half of U.S. adults say housing is a "major" source of stress, according to the poll, while about 4 in 10 say that about the amount of money they get paid, the amount of money they have saved and the cost of health care. About 3 in 10 say credit card debt is a "major" source of stress, while about 2 in 10 say that about the cost of child care and student debt. But some groups are feeling much more anxiety about their finances than others. Women, for instance, are more likely than men to report high levels of stress about their income, savings, the cost of groceries and the cost of health care. Hispanic adults are also particularly concerned about housing costs and both credit card and student debt. About two-thirds of Hispanic adults say the cost of housing is a "major" source of stress, compared with about half of Black adults and about 4 in 10 white adults. Some people are making changes to their lifestyle as a result of high costs. Shandal LeSure, 43, who works as a receptionist for a rehabilitation hospital in Chattanooga, Tennessee, and makes between $85,000 and $100,000 a year, said she's started shopping for groceries at less expensive stores. "It's an adjustment," she said. "Sometimes the quality isn't as good." Many US adults have used 'buy now, pay later' services As they stretch limited budgets, about 3 in 10 U.S. adults overall say they've used "buy now, pay later" services such as Afterpay or Klarna to purchase groceries, entertainment, restaurant meals or meal delivery, or medical or dental care, according to the poll. Bland, the Washington state retiree, said she's paid for pet surgery with a pay-later plan. Younger Americans are much likelier than older people to have used pay-later plans for entertainment, groceries or restaurant meals, but there's no age gap on medical care. Black and Hispanic people are also especially likely to adopt the plans. An increasing share of "buy now, pay later" customers are having trouble repaying their loans, according to recent disclosures from the lenders. The loans are marketed as a safer alternative to traditional credit cards, but there are risks, including a lack of federal oversight. Some consumer watchdogs also say the plans lead consumers to overextend themselves financially. LeSure said she's used pay-later services for things like new clothes, while she balances debt payments for a car loan, student loans and medical bills. She's also turned to them to cover hotel costs after being evicted.
Miami Herald
6 hours ago
- Miami Herald
Tony Robbins sends warning message to Americans on IRAs, 401(k)s
Planning for retirement is a multifaceted endeavor that requires balancing financial preparedness with the desire to maintain a comfortable and meaningful lifestyle. From managing everyday expenses to making strategic investment choices, retirees must consider many factors to ensure long-term stability. Tony Robbins, the well-known author, speaker, and philanthropist, strongly advocates Roth 401(k)s and Roth IRAs as essential tools in retirement planning. Don't miss the move: Subscribe to TheStreet's free daily newsletter He emphasizes their long-term financial benefits, particularly the potential for tax-free growth and withdrawals, which can offer significant advantages in retirement. Among the most important financial considerations for future retirees are estimating Social Security benefits, preparing for rising health care costs, and evaluating whether current savings and investments will be sufficient to support their goals. These foundational elements help shape a realistic and sustainable retirement plan, Robbins explains. Daily living expenses also play a critical role in retirement budgeting. Costs such as food, utilities, transportation, and leisure activities must be accounted for to maintain one's preferred standard of living. These routine expenditures, Robbins clarifies, can have a substantial impact on financial well-being over time. Related: Dave Ramsey has blunt words for Americans on Medicare, Medicaid Despite market volatility and economic uncertainty, many American workers continue to prioritize retirement savings. Employer-sponsored 401(k) plans remain a popular and effective method for building retirement funds, especially when employers offer matching contributions. The convenience of automatic payroll deductions makes it easier for employees to save consistently with minimal effort. In 2025, the contribution limit for 401(k) plans has increased to $23,500, up from $23,000 in 2024. Workers aged 60 to 63 can now make catch-up contributions of up to $11,250, a notable increase compared to the $7,500 limit available to those aged 50 to 59. These changes provide greater flexibility for late-stage savers to bolster their retirement accounts. Individual Retirement Accounts (IRAs) offer another valuable option, particularly for those seeking a broader range of investment choices than many 401(k) plans provide. However, IRAs require more active involvement, as individuals must set up their own accounts and manage contributions independently. For 2025, the IRA contribution limit remains at $7,000, with an additional $1,000 catch-up allowance for individuals aged 50 to 59. Image source: Getty Taking all of this into account, Robbins advocates for the use of Roth 401(k)s and Roth IRAs, believing they offer a powerful way for individuals to build tax-efficient wealth and achieve greater financial confidence in retirement. His perspective underscores the importance of proactive planning and informed decision-making in securing a fulfilling future. "If you were a farmer, would you rather pay tax on the seed of your crop or on the entire harvest once you have grown it?" he asked in his book, "Money: Master the Game." More on personal finance: Dave Ramsey has blunt words for Americans on Medicare, MedicaidJean Chatzky sends strong message on major 401(k) changesFinance expert has blunt words for car buyers This analogy is used to illustrate the benefits of Roth retirement accounts - such as Roth IRAs and Roth 401(k)s - where one pays taxes on contributions now (the seed) rather than on withdrawals later (the harvest). Related: Tony Robbins sends strong message to Americans on 401(k)s, IRAs Robbins emphasizes that Roth retirement accounts offer a strategic advantage by allowing individuals to pay taxes up front on their contributions. Once the post-tax amount is deposited, the account's growth and future withdrawals are entirely tax-free. Robbins explains that this approach not only protects savings from potential future tax hikes but also provides greater clarity and control over retirement finances. By locking in the tax liability early, individuals can avoid the uncertainty of changing tax rates and better plan for their long-term needs. Robbins highlights the fact that Roth-eligible 401(k) contributions follow the same principle, enabling workers to pay taxes today and enjoy untaxed growth and withdrawals later. This method, he argues, is a powerful way to safeguard retirement income from future government taxation and ensure that retirees know exactly how much they'll have available to spend. Related: Secretary Bessent's Social Security remarks spark AARP outcry The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
