Latest news with #retirees
Yahoo
13 hours ago
- Business
- Yahoo
Contributor: Social Security is headed for a cliff. When will voters care?
Considering recent news, you may have missed that the 2025 trustees reports for Social Security and Medicare are out. Once again, they confirm what we've known for decades: Both programs are barreling straight toward insolvency. The Social Security retirement trust fund and Medicare Hospital Insurance trust fund are each on pace to run dry by 2033. When that happens, seniors will face an automatic 23% cut in their Social Security benefits. Medicare will reduce payments to hospitals by 11%. These cuts are not theoretical. They're baked into the law. If nothing changes, they will be made. I have nothing against cuts of this size. In fact, if it were up to me, I would cut deeper. Medicare is a terrible source of distortions for our convoluted healthcare market and needs to be reined in. Social Security was created back when being too old to work meant being poor. That's no longer the case for as many people. Thanks to decades of compound investment growth, widespread homeownership and rising asset values, seniors are no longer the systematically vulnerable group they once were. The top income quintile includes a growing number of retirees who draw substantial incomes from pensions and investment portfolios with Social Security benefits layered on top. These programs have become a transfer of wealth from the relatively poor to the relatively wealthy and old. Of course, America still has some poor seniors, so cutting across the board is bad. This is why the cuts should be targeted, not the automatic effects in 2033. And Congress should get started now. The size of the problem is staggering. Social Security's shortfall now equals 3.82% of taxable payroll or roughly 22% of scheduled benefit obligations. Avoiding insolvency eight years from now would require an immediate 27% benefit cut, according to former Social Security and Medicare trustee Charles Blahous. Alternatively, legislators could raise the payroll tax from 12.4% to 16.05%. That's a 29.4% increase. Or they could restructure Social Security so that only people who need the money would receive payments. But because facing this problem in an honest way is politically toxic, legislators are ignoring it. Blame does not rest solely with Congress. The American public has made it abundantly clear that they don't want reforms. They don't want benefit cuts or tax increases, and they certainly don't want higher retirement ages. So politicians pretend everything is fine. Congress does deserve fresh criticism for making things worse. Last year, legislators passed the misnamed 'Social Security Fairness Act,' giving windfall benefits to government workers who didn't pay into the system — which enlarges the shortfall. This year, the House proposed expanded tax breaks for seniors in the 'One Big Beautiful Bill Act,' which would further worsen the problem. The cost of political giveaways is steep. Social Security's 75-year unfunded obligation has now reached $28 trillion, up from $25 trillion just a year ago. Medicare is no better. Its costs are projected to rise from 3.8% of gross domestic product today to 6.7% by the end of the century (8.8% under more realistic assumptions). Most of the additional spending will be financed through general revenue, meaning more borrowing and more pressure on the federal budget. As Romina Boccia of the Cato Institute has documented, other countries have taken meaningful steps to address similar challenges. Sweden and Germany implemented automatic stabilizers that slow benefit growth or raise taxes when their systems become unsustainable. New Zealand and Canada have moved toward more modest, poverty-focused pension systems that offer basic support without bankrupting the state. A few weeks ago, Denmark increased the retirement age to 70. These are serious reforms. The U.S. has done nothing. Options exist. Policymakers could gradually raise the retirement age to reflect modern, healthier, longer lives. They could cap benefits at $2,050 monthly, preserving income for the bottom 50% of beneficiaries while progressively reducing benefits for the top half. They could reform the tax treatment of retirement income to encourage private savings, as Canada has done with its tax-free savings accounts. Any combination of these reforms would help. But that would require admitting that the current path is unsustainable. It would require telling voters the truth. It would require courage. So far, these admirable traits have been sorely lacking in our politicians. The programs' trustees have made the stakes clear: The only alternatives to reform will be drastic benefit cuts or massive tax hikes. Waiting until the trust funds are empty will leave no room for gradual, targeted solutions. It will force crisis-mode slashing that will hurt the most vulnerable. The ultimate blame is with voters who continue to reward politicians for promising the impossible. A functioning democracy cannot survive if the electorate insists on voting benefits for themselves to the point of insolvency. At some point, reality asserts itself. That moment is rapidly approaching. Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University. This article was produced in collaboration with Creators Syndicate. If it's in the news right now, the L.A. Times' Opinion section covers it. Sign up for our weekly opinion newsletter. This story originally appeared in Los Angeles Times.
Yahoo
18 hours ago
- Business
- Yahoo
5 Reasons Retirees Should Consider Taking Out a Personal Loan
Retirement often comes with a fixed income, but that doesn't mean unexpected expenses disappear. From rising healthcare costs to home repairs and lingering debt, retirees may face financial gaps that savings alone can't cover. Read Next: Check Out: In the right circumstances, a personal loan can be a smart, strategic tool to manage those challenges. While borrowing in retirement requires careful consideration, here are five reasons retirees could consider taking out a personal loan. Withdrawing from retirement accounts prematurely can trigger taxes or penalties. A short-term personal loan may offer a buffer, giving investments more time to grow or delaying taxable withdrawals. 'Retirees and those nearing retirement tend to be super cautious about loans, and part of the reason for this is that they believe that by the time they are retired, they should have completely fulfilled their debt obligations,' said Aaron Razon, a personal finance expert at Couponsnake. 'They, however, forget to factor that in a significant way, loans are leverages, opportunities to tap into financial resources that can enhance retirement security.' Be Aware: Some retirees carry credit cards or other high-interest debt into retirement. A LendingTree analysis found that over 97% of U.S. retirees have non-mortgage debt. Among retirees in the country's largest cities, the median non-mortgage debt is $11,349. Using a personal loan to consolidate balances can lower interest rates, reduce monthly payments and simplify finances. 'A 67-year-old retiree needs $20,000 to pay off an existing high-interest debt that has been a major strain on her monthly budget causing her to fall behind on other bills and accumulate late fees as a result,' Razon said. 'So she takes out a personal loan with a 10% interest rate and a three-year repayment term to consolidate her debt into a single manageable monthly payment, which allows her to reduce her financial stress and save on interest charges.' Even with Medicare, out-of-pocket costs and uncovered procedures can quickly add up. According to the latest data from the Consumer Financial Protection Bureau (CFPB), around 4 million older adults reported having unpaid medical bills. And that's despite the fact that nearly all of them (98%) had health insurance. CFPB researchers found that much of the unpaid medical bills were due to billing inaccuracies. 'CFPB findings suggest that providers are billing older dual beneficiaries for amounts they don't owe,' CFPB researchers said. While a personal loan can't resolve billing inaccuracies, it can tide retirees over until billing disputes are resolved without draining savings or disrupting investments. Whether it's relocating to a retirement community, helping a grandchild with college or downsizing, a personal loan can offer short-term liquidity for big life changes. Razon said personal loans offer fixed interest rates and predictable payments, making them a budget-friendly option for retirees on a fixed income. 'In a personal loan, retirees should look for competitive interest rates, and flexible repayment terms, and make sure to borrow an amount that is sufficient for their needs without overburdening themselves,' Razon said. 'They should also look for a repayment schedule that fits their income and expense cycle and verify the lender's reputation.' Even in retirement, unexpected financial hiccups can occur. A delay in Social Security payments, pension distribution delays or the sale of an asset can create a short-term income gap, putting a strain on daily living expenses. Rather than turning to high-interest credit cards or withdrawing funds from retirement accounts, which could trigger taxes or penalties, a personal loan can provide quick and predictable funding. With fixed payments and a clear payoff timeline, it can provide a manageable solution that avoids long-term financial disruption. 'A personal loan is like fire,' said Stoy Hall, CFP, CEO and founder of Black Mammoth, a wealth management company. 'Used right, it can warm your house or cook your food. Used wrong, it burns your whole financial future down.' More From GOBankingRates The 5 Car Brands Named the Least Reliable of 2025 This article originally appeared on 5 Reasons Retirees Should Consider Taking Out a Personal Loan 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
19 hours ago
- Business
- Yahoo
Suze Orman: 3 Retirement Curveballs To Watch Out For
Most people don't know how long they'll live or what their old age will look like, and there's no shortage of brutal realities. For example, most people will have to reduce or all together stop driving by their mid-70s. Additionally, the lifetime risk of dementia increases to over 50% among those who reach age 75. And most people are likely to develop a condition requiring long-term care in their senior years. You can hope for the best, but you have to prepare for the worst. Find Out: Read Next: In a recent post on her blog, financial expert Suze Orman discussed three common retirement curveballs. Even if you're lucky enough to dodge these curveballs, you need to know what they are and to stress-test your retirement plan to make sure that if you are struck, you — and your finances — can handle it. This year's Retirement Confidence Survey by the Employee Benefit Research Institute found that 3 in 4 people working expect to go on to continue to earn money in retirement. But that doesn't usually happen. 'In reality, only three in 10 people surveyed who are retired are working for pay,' Orman wrote. The top reason retirees opt to go back to work is to be able to make money amid rising costs of living. But what if you physically or mentally can't return to a working lifestyle? Around 46% of Americans ages 75 and older and 24% of those ages 65 to 74 reported having a disability, according to estimates from the Census Bureau's 2021 American Community Survey (ACS). Who's to say that you won't be among the Americans who have a disability in retirement, and one that renders you unable to generate income? Be Aware: Maybe you're set on retiring at the full retirement age of 66 or 67, depending on when you were born. Maybe you're thinking you may even push it back a couple years to make some more money before you bid adieu to working life. Consider the cruel possibility that you may not have a choice but to retire early. 'About two-thirds of people surveyed who reported they retired earlier than planned said it wasn't their idea,' Orman wrote, citing data from the Retirement Confidence Survey. 'About 30% said they stopped working due to downsizing or other strategic staffing changes at their job, and another 30% had a health problem or disability that pushed them to retire early. Some people reported stopping work earlier to care for a spouse or another family member.' Do you want to sail smoothly into retirement? Maybe do leave the full-time hustle and bustle but work as a consultant for a few years before exiting the workforce? Well, yet another brutal reality could strike. A bad health event or some other serious situation in your life may force you to pull the plug fast on the working life. 'Half of the surveyed workers said they plan to have a gradual transition to retirement where they have reduced hours, rather than a cold-turkey full-time stop,' Orman wrote. 'Yet nearly 3 in 4 retirees said they, in fact, didn't have the gradual transition, and instead did an abrupt change from working on Friday and being retired on the following Monday.' They're called curveballs because we don't see them coming. But that doesn't mean we can't prepare for them so that if they do hit us, we're not taken down with them. More From GOBankingRates Clever Ways To Save Money That Actually Work in 2025 This article originally appeared on Suze Orman: 3 Retirement Curveballs To Watch Out For
Yahoo
a day ago
- Business
- Yahoo
'I Thought I Could Still Work A Little': Retiree Hit With Surprise $9,648 Social Security Overpayment Notice
When one retiree left his job in last August and applied for Social Security at age 63 and 5 months, he thought he was doing everything by the book. In a post on Reddit, he shared that his first check came in September — but just a few months later, he was shocked to receive a letter stating he owed the Social Security Administration $9,648 due to overpayment. The issue? His earnings for the year had already exceeded the annual limit for Social Security recipients under full retirement age. Here's what went wrong — and what other soon-to-be retirees can learn from it. Don't Miss: GoSun's breakthrough rooftop EV charger already has 2,000+ units reserved — become an investor in this $41.3M clean energy brand today. Invest early in CancerVax's breakthrough tech aiming to disrupt a $231B market. Back a bold new approach to cancer treatment with high-growth potential. If you begin collecting Social Security before reaching full retirement age, there are limits on how much you can earn from working without seeing your benefits reduced. In 2024, the annual earnings limit was $22,320. If you earn more than that, the SSA withholds $1 for every $2 you earn above the limit. The retiree in this case had earned about $48,500 before quitting his job in early August. That was well over the annual limit, which automatically triggered a full clawback of his 2024 benefits. Since his first four checks added up to $9,648, that entire amount was marked for recovery. Many retirees don't realize there's a special rule for those who retire mid-year. This rule allows you to use a monthly earnings limit in your first year of retirement, instead of the full-year limit. In 2024, the monthly limit was $1,860. That means if you earned less than $1,860 in a given month, you could still receive your full Social Security payment for that month — even if your total earnings for the year were above the annual limit. In this retiree's case, he earned only $900 from August through December — well under the monthly threshold. Under the special rule, he may still qualify to keep the benefits he received in those months. Trending: This Jeff Bezos-backed startup will allow you to become a landlord in just 10 minutes, with minimum investments as low as $100. If you receive an overpayment notice and believe you qualify under the monthly earnings test, the SSA does allow certain months to be excluded from the annual earnings test. According to SSA guidelines, these are months where your earnings were below the monthly threshold and you were considered retired. To correct the record, the SSA recommends contacting them directly to report your earnings. You can do this: By phone or online, to inform them of months when your earnings were below the monthly limit. By requesting a waiver if repaying the full amount would cause financial hardship and you believe the overpayment wasn't your fault. This involves submitting Form SSA-632-BK. One user on the Reddit post also suggested submitting a signed statement that includes their total earnings and identifies the specific months they believe should be counted as "non-work" months. Keep in mind that different rules may apply if you were self-employed. The SSA generally considers more than 45 hours of work per month as substantial, even if your income was low — which could disqualify those months from being counted as "retired." Social Security rules can be confusing — especially when it comes to working while collecting benefits. If you're planning to retire mid-year, it's important to understand the special earnings limit rule and how to report your income correctly. By planning ahead and notifying the SSA about your work and earnings, you may be able to avoid unexpected overpayment notices — and keep more of your benefits in your pocket. See Next $100k in assets? Maximize your retirement and cut down on taxes: Schedule your free call with a financial advisor to start your financial journey – no cost, no obligation. Warren Buffett once said, "If you don't find a way to make money while you sleep, you will work until you die." Here's how you can earn passive income with just $100. Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today's competitive market. Get the latest stock analysis from Benzinga? APPLE (AAPL): Free Stock Analysis Report TESLA (TSLA): Free Stock Analysis Report This article 'I Thought I Could Still Work A Little': Retiree Hit With Surprise $9,648 Social Security Overpayment Notice originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved.
Yahoo
a day ago
- Politics
- Yahoo
Supreme Court sides against disabled firefighter suing for health benefits discrimination
WASHINGTON – The Supreme Court on June 20 ruled against a retired firefighter who wants to sue her former employer for reducing health care benefits for disabled retirees, a decision that failed to give the same ADA protections to retirees that current employees have. The court ruled that Karyn Stanley can't sue the city of Sanford, Florida, under the Americans with Disabilities Act. That upheld a lower court's ruling that the ADA didn't apply to Stanley because she no longer worked for the city when she filed her challenge. Writing for the majority, Justice Neil Gorsuch wrote that someone claiming discrimination under the ADA must prove that she held, or wanted, a job that she was able to perform at the time of the alleged discrimination. "In other words, the statute protects people, not benefits, from discrimination," he wrote. "And the statute tells us who those people are: qualified individuals, those who hold or seek a job at the time of the defendant's alleged discrimination." If Congress wants to expand the law to protect retirees like Stanley, it can, he continued. "But the decision whether to do so lies with that body, not this one," he wrote. In a dissent, Justice Ketanji Brown Jackson said retirement benefits are 'essential building blocks of the American dream.' 'Disabled Americans who have retired from the workforce simply want to enjoy the fruits of their labor free from discrimination,' she wrote in the dissent that was joined in part by Justice Sonia Sotomayor. 'It is lamentable that this Court so diminishes disability rights that the People (through their elected representatives) established more than three decades ago.' Jackson said Congress could step in 'to fix the mistake the Court has made.' Lower courts have been divided over whether retirees are protected by the Americans with Disabilities Act. The law was designed to protect active employees and job applicants from discrimination. It was not intended as a law that extended to employers' relationships with former employees, the business groups and associations representing cities and counties against Stanley's allegations argued. The law covers someone who 'with or without reasonable accommodation, can perform the essential functions of the employment position that such individual holds or desires.' Stanley's lawyers argued she was employed – and thus covered by the law − when her future benefits were curtailed in 2003. When Stanley became a firefighter in 1999, the city paid for $1,000 of her approximately $1,300 monthly premium for health insurance. Anyone retiring after 25 years of service or because of a disability would continue to receive the benefit until age 65. After Stanley left the department in 2018 at 47 due to Parkinson's disease, she discovered that benefits for disabled retirees were reduced in 2003. The city covered $1,000 of her $1,300 monthly health insurance premium for only two years, after which she was required to pay the whole premium herself. Arguing that the city discriminated against her because of her disability, Stanley sued, asking the city to continue to pay $1,000 of her monthly insurance premium until she turns 65. The city countered that even though Stanley's benefits were reduced, the company treated her better – not worse – than non-disabled employees who retired with less than 25 years of service because those employees get no subsidy while she retained it for two years. The case is Stanley v. City of Stanford. This article originally appeared on USA TODAY: Supreme Court sides against disabled firefighter in benefits case
