Personal Finance
Brain rot was word of the year, dynamic pricing was also a contender
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Oxford University Press may have crowned “brain rot” the word of the year, but “dynamic pricing” was also a top contender.
Originally coined by economists in the late 1920s, dynamic pricing refers to “the practice of varying the price for a product or service to reflect changing market conditions. In particular, the charging of a higher price at a time of greater demand,” the publishing house said on its site.
Many people associate it with shifting airline ticket prices or how ride-hailing service Uber adjusts fares at busy times. However, there was heightened awareness — and controversy — around the practice in 2024, especially when it came to buying highly sought-after event tickets.
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“In some high-profile cases, dynamic pricing was used in setting prices for concert tickets, resulting in fans (often reluctantly) paying very high prices to see their favourite artists. In some cases, fans were in a virtual queue for hours before realizing how much they would be asked to pay, leading to questions about the transparency of dynamic pricing practices, as well as value for money,” Oxford said.
How and when artists use dynamic pricing
Ticketmaster is under investigation in the U.K. for its recent use of dynamic pricing in sales of next year’s reunion concerts from Britpop band Oasis.
Many Oasis fans took to social media to complain that they ended up paying more than double the face value of the ticket without warning. The band said it would abandon the practice for the North American leg of its tour.
Taylor Swift performs at Scottish Gas Murrayfield Stadium on June 07, 2024 in Edinburgh, Scotland. Swift’s Eras World Tour plays 15 dates across Scotland, Wales and England in June and August.
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Taylor Swift reportedly refused to dynamically price her Eras Tour tickets because “she didn’t want to do that to her fans,” Jay Marciano, chairman and CEO of AEG Presents, which promoted the event, told HITS Daily Double in October.
Also in an interview this fall, Robert Smith, the lead vocalist and guitarist for the Cure, said dynamic pricing is “driven by greed,” calling the practice a “scam.”
How and when dynamic pricing is used is at the discretion of the artist or management, according to Andrew Mall, an associate professor of music at Northeastern University — and it was often determined under the radar.
However, with so many recent high-profile tours, “for sure, dynamic pricing has surged to the forefront of concert goers’ attention,” he said.
‘A capitalist inevitability’
“We all know that if you are looking for an Uber or Lyft, there are certain times of night when it’s more expensive. The market seems to have adapted to that,” said Joe Bennett, a forensic musicologist at Berklee College of Music. “But concert tickets were generally a fixed price.”
Slowly, however, a change was taking hold.
Throughout the 21st century, revenue from recorded music has gone down while revenue from live music events has gone up. By the mid-2000s, concerts “provided a larger source of income for performers than record sales or publishing royalties,” economist Alan Krueger wrote in a paper on the economic issues and trends in the rock and roll industry. Live music industry revenue jumped 25% in 2023 alone, according to data from Statista.
In 2011, Ticketmaster first introduced an early version of dynamic ticket pricing, which is now the standard for live music ticketing sales. In more recent years, “ticket sales went crazy” driven by post-pandemic pent-up demand and a surge in mega-star stadium tours, Bennett said.
“You can see why it’s tempting,” he said. “The live music industry is constantly leaving money on the table that fans would pay. Dynamic pricing is sort of a capitalist inevitability given the forces at play, but I don’t want to live in a world where it costs a $1,000 for my daughter to see Taylor Swift.”
Still, it’s now common for ticket-selling platforms to charge more per ticket depending on demand for the event at any given time — whether consumers like it or not.
“It’s not very popular, as you might imagine,” said Matt Schulz, LendingTree’s chief credit analyst. “Businesses and musicians are trying to see what the market will bear, and it makes things really difficult for the consumer.”
Chalk it up to ‘funflation’
Despite complaints, consumers prove that they have a high tolerance for the increasing price tags of live events, also known as “funflation.” Younger adults, particularly Generation Z and millennials, have demonstrated they would even go into debt to pursue some of these experiences, recent reports show.
Nearly two out of five Gen Z and millennial travelers have spent up to $5,000 on tickets alone for destination live events, one recent study from Bread Financial found.
“Knowing your limits is important,” Schulz said. “As much as you might love your favorite musician, there should be a limit to how much debt you are willing to go into for them.”
Why dynamic pricing won’t go away
“Consumers don’t like the idea of dynamic pricing, but there is a renewed ‘YOLO’ [you only live once] attitude over the past few years since the pandemic and, increasingly, that drives a devil-may-care approach when it comes to spending on discretionary experiences,” said Greg McBride, chief financial analyst at Bankrate.com.
Even with household budgets strained, “you get to a point where there are just some experiences where consumers draw the line and say, that’s not something I’m willing to give up,” he said.
Ticket sellers are well aware of this mentality, too.
“Our research consistently tells us that concerts are a top priority for discretionary spending, and one of the last experiences fans will cut back on,” Live Nation said in a quarterly earnings call in 2023.
But as consumers continue to spare no expense to see their favorite artist or group, that means that means dynamic pricing is here to stay, at least for now.
“The live music sector has been leaning into this attitude for a long time,” Northeastern University’s Mall said.
Personal Finance
Biden signs Social Security bill to increase benefits for millions of public workers
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If you’re eager to save more for retirement, you could be overlooking ways to maximize your 401(k) plan, including key changes for 2025.
Some 40% of Americans are behind on retirement planning and savings, according to a CNBC poll conducted by SurveyMonkey, which polled 6,657 U.S. adults in August.
But before making 401(k) plan changes, experts say you should always review your financial situation, including your income, immediate spending needs and goals.
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“401(k) investing focuses on long-term retirement goals,” said certified financial planner Salim Boutagy, partner at Moneco Advisors in Fairfield, Connecticut. But it should work alongside other savings that cover your midterm goals, emergencies and immediate spending needs.
If you’re ready to boost retirement savings, here are some key things to know about your 401(k) for 2025.
Use higher 401(k) contribution limits as a ‘prompt’
Starting in 2025, employees can defer $23,500 into 401(k) plans, up from $23,000 in 2024. The catch-up contribution limit remains at $7,500 for investors age 50 and older.
“This higher ceiling isn’t just a win for high earners,” said CFP Jon Ulin, managing principal of Ulin & Co. Wealth Management in Boca Raton, Florida. “It’s a prompt for everyone to consider boosting their savings rate,” Ulin added.
Even 1% yearly increases “can make a substantial difference” thanks to compound growth over time, he said.
The retirement plan savings rate for the third quarter of 2024, including employee deferrals and company contributions, was an estimated 14.1% as of Sept. 30, according to Fidelity Investments, based on an analysis of 26,000 corporate plans.
Leverage the 401(k) ‘super max catch-up’
On top of higher 401(k) deferral limits, there is also a new “super max catch-up” opportunity for some older investors in 2025, said CFP Dinon Hughes, a greater Boston area-based financial consultant with Nvest Financial.
If you are between the ages of 60 and 63 in 2025, the catch-up contribution limit increases to $11,250, which brings the total deferral cap to $34,750 for this group.
Only about 14% of employees maxed out 401(k) plans in 2023, according to Vanguard’s 2024 How America Saves report, based on data from 1,500 qualified plans and nearly five million participants.
However, there is “one major caveat,” Hughes said.
Your 401(k) must allow the increased catch-up contributions. Otherwise, payroll could flag the added funds as excess 401(k) deferrals, he said. There can be tax consequences if excess deferrals are not removed.
“Check with your employer now to avoid a much bigger headache at the end of 2025,” Hughes said.
Check for ‘true up’ before maxing out early
Generally, experts recommend investing sooner to boost compound growth over time. But you could lose part of your employer’s matching contribution by maxing out your 401(k) early — unless your plan has a special feature.
Typically, your employer’s 401(k) match uses a formula to deposit extra money into your account. You must defer a certain percentage of income from each paycheck to receive your full employer match for the year.
Some plans offer a “true-up,” or deposit of the remaining employer match, for employees who max out their 401(k) plan before year-end.
If your plan offers this feature, it’s a green light to contribute aggressively in January, maximizing market exposure from day one.
Jon Ulin
Managing principal of Ulin & Co. Wealth Management
“If your plan offers this feature, it’s a green light to contribute aggressively in January, maximizing market exposure from day one,” Ulin said.
Some 67.4% of plans made true-up matches when matches were not made annually in 2023, according to the Plan Sponsor Council of America’s latest yearly survey. The feature is most common in larger plans.
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Retirees can expect to see some big changes in 2025 when it comes to their Social Security and Medicare benefits.
President Joe Biden is expected to sign a bill that will increase Social Security benefits for certain pensioners. Additionally, the annual Social Security cost-of-living adjustment goes into effect for all beneficiaries.
And Medicare enrollees who are worried about health-care costs now have a $2,000 annual out-of-pocket Part D prescription drug cap aimed at helping to reduce those financial pressures.
Here are some important changes to note for the coming year.
Some pensioners could get benefit increase
The Senate passed a bill in the final legislative days of 2024 to boost Social Security payments for millions of people who receive pensions from work in federal, state and local government, or in public service jobs such as teachers, firefighters and police officers. The House had passed the bill in November.
Now, Biden is expected to sign the bill into law in the coming days.
The Social Security Fairness Act eliminates two provisions that reduce Social Security benefits for certain individuals who also have pension income from public work where Social Security payroll taxes were not paid.
That includes the Windfall Elimination Provision, or WEP, which reduces Social Security benefits for individuals who also receive pension or disability benefits from employers who did not withhold Social Security taxes.
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It also includes the Government Pension Offset, or GPO, which reduces Social Security benefits for spouses, widows and widowers who receive their own government pensions.
Together, the rules affect around 2.5 million beneficiaries, according to the Congressional Research Service. Once enacted, the law may provide higher benefit payments to those individuals.
Notably, it may provide retroactive payments of those benefit increases for the months after December 2023.
The legislation marks the biggest change to Social Security since certain couples claiming strategies were phased out in 2016, said Martha Shedden, president of the National Association of Registered Social Security Analysts.
“We’re sort of in limbo as to how that process will proceed, when people will see that increase and how the retroactive [benefits] will be applied,” Shedden said.
All Social Security beneficiaries to get 2.5% COLA
In 2025, all beneficiaries will see a 2.5% increase to their Social Security benefit checks, thanks to an annual cost-of-living adjustment.
Of note, the 2024 increase was 3.2%. This year’s COLA is the lowest increase beneficiaries have seen since a 1.3% increase in 2021, reflecting a decrease in the pace of inflation.
The change will be effective with January checks for more than 72.5 million Americans, including Supplemental Security Income beneficiaries.
The average worker retirement benefit will be $1,976 per month, up from $1,927 in 2024, according to the Social Security Administration.
Monthly Medicare Part B premiums go up
Monthly Medicare Part B premiums — which are often deducted directly from Social Security checks — may affect just how much of a bump beneficiaries see in their 2025 benefit payments.
Medicare Part B covers physician, outpatient hospital and certain home health services, as well as durable medical equipment.
In 2025, the standard monthly Part B premium will be $185 per month — a $10.30 increase from $174.70 in 2024.
Part B deductibles will also rise, to $257, in 2025 — a $17 increase from the $240 annual deductible for 2024.
Medicare Part B premiums are based on a beneficiary’s modified adjusted gross income, or MAGI, from their tax returns from two years prior. In 2025, beneficiaries who had less than or equal to $106,000 in MAGI in 2023 will pay the standard monthly Part B premium, as will married couples with less than or equal to $212,000.
Beneficiaries with higher incomes will be subject to income-related adjustment amounts, or IRMAA, that increase their monthly premium payments.
Medicare $2,000 prescription drug cap goes into effect
Annual out-of-pocket Medicare Part D drug costs will now be capped at $2,000, as changes enacted with the Inflation Reduction Act go into effect.
Beneficiaries with Medicare Part D drug plans that have a deductible will pay out-of-pocket costs until that threshold is met. In 2025, the highest deductible for those plans is $590.
Once beneficiaries pay their full deductible, they will owe 25% of the cost of coinsurance until their out-of-pocket spending on both generic and brand-name drugs reaches $2,000. After that, those beneficiaries will have what’s known as catastrophic coverage, which means they won’t be on the hook to pay out-of-pocket Part D costs for the rest of 2025.
However, beneficiaries will also have the option to pay out-of-pocket costs monthly over the course of the year, instead of all at once.
Notably, insulin costs have also been capped at $35 per month, both under Medicare Part D covered treatments and Medicare Part B covered insulin used with pumps.
Social Security trust fund depletion dates get closer
In 2024, the Social Security trustees projected the trust fund the program relies on to help pay retirement benefits may be depleted in 2033. At that time, just 79% of those benefits may be payable, unless Congress acts sooner.
Social Security’s combined trust funds — used to pay both retirement and disability benefits — are projected to run out in 2035.
Now that the calendar has turned to a new year, those depletion dates are closer.
Notably, the previously mentioned Social Security Fairness Act that will provide increased benefits to some pensioners may move the trust fund depletion date six months closer.
“That’s the major looming issue right now, is what can be done to shore up those trust funds,” Shedden said. “That’s going to require very comprehensive, bipartisan changes to multiple parts of the Social Security rules in the program.”
However, most financial advisors emphasize that shouldn’t affect personal claiming decisions.
For younger generations, there could be changes to future benefits, said George Gagliardi, a certified financial planner and founder of Coromandel Wealth Strategies in Lexington, Massachusetts.
“But for those already receiving or about to get Social Security checks, I don’t think that there is anything to worry about,” Gagliardi said.
Other important changes to note
- Maximum taxable earnings — the amount of wages subject to Social Security payroll taxes — will rise to $176,100 in 2025, up from $168,600 in 2024. Once workers hit that cap, they no longer pay into the program for the rest of the year.
- Social Security beneficiaries who claim benefits before their full retirement age and who continue to work face what is known as a retirement earnings test. The earnings exempt from the retirement earnings test is now $23,400 per year in 2025 for those under full retirement age, up from $22,320 per year in 2024. For every $2 in earnings above the limit, $1 in benefits is withheld. For the year an individual reaches retirement age, a higher threshold of $62,160 in earnings applies, up from $59,520 in 2024. For every $3 in earnings above the limit, $1 in benefits is withheld. Of note: this only applies to the months before a beneficiary turns full retirement age. Starting from their birthday month, the retirement earnings test no longer applies. Importantly, once a beneficiary reaches full retirement age, any previously withheld benefits are applied to monthly benefits.
- Do you want to talk to the Social Security Administration face to face? Starting Jan. 6, the agency is requiring appointments for local office services, such as obtaining Social Security cards. To improve efficiency, the agency is directing individuals who need help to first try its online or automated telephone services. However, people who are unable to schedule in-person appointments, particularly vulnerable individuals, may still come in and get in-person service.
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