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Here are the changes to expect

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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.

Maximizing your Social Security benefits

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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Personal Finance

How to land a job in a ‘low firing, low hiring’ market: economist

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Job seekers at a job fair hosted by the Metropolitan Washington Airports Authority to support federal workers looking for new career opportunities, at Ronald Reagan Washington National Airport in Arlington, Virginia, on April 25, 2025.

Ting Shen/Bloomberg via Getty Images

These days, job hunting may feel like something of a paradox: Even though the overall market is strong, it can be tough for jobseekers to find a new gig, according to economists.

Unemployment was relatively low in April, at 4.2%, and job growth exceeded expectations. The layoff rate is historically low, meaning those with jobs are holding onto them.

Yet it has gotten harder to find new work.

Businesses are hiring at their slowest pace since 2014. Nearly 1 in 4 jobless workers, 23.5%, are long-term unemployed — meaning they’ve been out of work for more than six months — up from 19.6% a year ago.

Cory Stahle, an economist at the Indeed Hiring Lab, called it a “low firing, low hiring trend” in a note on Friday.

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There’s a “growing divide” in the labor market between those out of work and those who are employed, Stahle wrote.

The changing market conditions may feel jarring for job seekers, given that a few years ago there were record-high job openings and workers were quitting at record levels amid ample opportunity.

“This is just how it is right now: Companies are not hiring,” said Mandi Woodruff-Santos, a career coach and personal finance expert. “If they are, it’s very infrequent.”

Economic headwinds like trade wars and tumbling consumer confidence may make job-finding more difficult in coming months, economists said.

“The market can’t escape the consequences of rapidly souring business and consumer confidence forever,” Stahle wrote.

How job seekers can stand out in a tough market

Shannon Fagan | The Image Bank | Getty Images

Even in this “low firing, low hiring” market, there are ways for jobseekers to stand out, experts said.

“When the market changes, the way you search for a job may also have to be adjusted,” Jennifer Herrity, a career trends expert at Indeed, wrote in an e-mail.

1. Be ‘creative’ with networking

Job seekers will likely have to lean on personal relationships more than in the recent past, experts said.

Most jobs come through referrals or internal candidates, meaning people need to be “creative” and “strategic” about networking possibilities, Woodruff-Santos said.

“Instead of waiting for someone to pick your resume from a pile, you have to make it undeniable: Put yourself in front of them,” she said.

“Creating space for human connections and creating relationships will give you a little something extra,” she added.

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Don’t just look for obvious networking events like job fairs or expos heavily attended by other job seekers, Woodruff-Santos said.

She recommends seeking out conferences, seminars, special talks and book signings. For example, say you work in information technology and someone writes a book on corporate security in the world of artificial intelligence. Go to that author’s book signing, lecture, seminar or Q&A, Woodruff-Santos said — since the audience would likely be people in businesses with an interest in IT security.

Reconnect with former colleagues to get on a hiring manager’s radar before a role opens to the general public, Herrity said.

2. Look for internal opportunities

Workers dissatisfied with their current roles may be overlooking internal career opportunities, experts said.

“While hiring may appear to be slowing on the surface, it usually just means that opportunities have gone further underground,” Frances Weir, a principal at organizational consulting firm Korn Ferry, said in a March briefing.

However, employees should be strategic: For example, they likely shouldn’t apply to several different jobs at the company or seek to move on from a role they started only months ago, according to the firm.

3. Customize applications

“Generic resumes won’t stand out to employers in a tight market,” Herrity said. “Tailor your resume and cover letter to each role, echoing keywords from the job description and aligning your skills with the employer’s needs.”

Applicants should also highlight results — instead of responsibilities — on their resume and in interviews, she said. That shows they’re a proven performer by quantifying achievements.

4. Upskill and reskill

“Employers value candidates who use slow periods to grow,” Herrity said. “This is especially important for those facing long-term unemployment who may find themselves in a skills gap.”

She recommends finding free or low-cost courses in any relevant career areas to help fill gaps and signal initiative, motivation and self-teaching.

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List recent certifications or course completions in the “education” or “skills” section of a resume, she said.

5. Be flexible

While waiting for your ideal job, success might mean being open to contract work, hybrid roles or adjacent industries, Herrity said.

“Short-term roles can be a great opportunity to grow your network and skills, then leap when the right full-time role appears,” she said.

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I bonds investments and Trump’s tariff policy: What to know

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As investors worry about future inflation amid President Donald Trump‘s tariff policy, some experts say assets like Series I bonds could help hedge against rising prices.  

Currently, newly purchased I bonds pay 3.98% annual interest through October 31, which is up from the 3.11% yield offered the previous six months. Tied to inflation, the I bond rate adjusts twice yearly in part based on the consumer price index.

Certified financial planner Nathan Sebesta, owner of Access Wealth Strategies in Artesia, New Mexico, said there’s been a “noticeable uptick” in client interest for assets like I bonds and Treasury inflation-protected securities

“While inflation has moderated, the memory of recent spikes is still fresh, and tariff talk reignites those concerns,” he said.

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I bonds can be a ‘sound strategy’

As of May 7, the top 1% average high-yield savings accounts currently pay 4.23%, while the best one-year CDs offer 4.78%, according to DepositAccounts. Meanwhile, Treasury bills still offer yields above 4%.

Of course, these could change, depending on future moves from the Federal Reserve.

If you’re worried about higher future inflation and considering I bonds, here are some key things to know.

How I bonds work

I bond rates combine a variable and fixed rate portion, which the Treasury adjusts every May and November.

The variable portion is based on inflation and stays the same for six months after your purchase date. By contrast, the fixed rate portion stays the same after buying. You can see the history of both parts here.

Currently, the variable portion is 2.86%, which could increase if future inflation rises. Meanwhile, the fixed portion is currently 1.10%, which could be “very attractive” for long-term investors, Ken Tumin, founder of DepositAccounts.com, recently told CNBC.

Before November 2023, I bonds hadn’t offered a fixed rate above 1% since November 2007, according to Treasury data.

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The downsides of I bonds

Despite the higher fixed rate and inflation protection, there are I bond downsides to consider, experts say.

You can’t access the money for at least one year after purchase, and there’s a three-month interest penalty if you tap the funds within five years. 

There are also purchase limits. You can buy I bonds online through TreasuryDirect, with a $10,000 per calendar year limit for individuals. However, there are ways to purchase more.

“There’s also the tax consequences,” Tsantes said.

I bond interest is subject to regular federal income taxes. You can defer taxes until redemption or report interest yearly.

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Personal Finance

Key ways consumer loans are affected

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CNBC Fed Survey: Respondents confident Fed will cut interest rates this year

When the Fed hiked rates in 2022 and 2023, the interest rates on most consumer loans quickly followed suit. Even though the central bank lowered its benchmark rate three times in 2024, those consumer rates are still elevated, and are mostly staying high, for now.

Five ways the Fed affects your wallet

1. Credit cards

Many credit cards have a variable rate, so there’s a direct connection to the Fed’s benchmark.

With a rate cut likely postponed until July, the average credit card annual percentage rate has stayed just over 20% this year, according to Bankrate — not far from 2024’s all-time high. Last year, banks raised credit card interest rates to record levels and some issuers said they are keeping those higher rates in place.

At the same time, “more people are carrying debt because of higher prices,” said Ted Rossman, senior industry analyst at Bankrate. Total credit card debt and average balances are also at record highs.

2. Mortgages

Prospective home buyers leave a property for sale during an Open House in a neighborhood in Clarksburg, Maryland.

Roberto Schmidt | AFP | Getty Images

Mortgage rates don’t directly track the Fed, but are largely tied to Treasury yields and the economy. As a result, uncertainty over tariffs and worries about a possible recession are dragging those rates down slightly.

The average rate for a 30-year, fixed-rate mortgage is 6.91% as of May 6, while the 15-year, fixed-rate is 6.22%, according to Mortgage News Daily. 

Mortgage rates “are showing signs of life after a slow couple of years,” said Michele Raneri, vice president and head of U.S. research and consulting at TransUnion. 

But for potential home buyers, that’s not enough of a decline to give the housing market a boost. “Many borrowers are reluctant to take on a loan at today’s rates, particularly if they currently have a loan at a significantly lower rate,” Raneri said.

3. Auto loans

Auto loan rates are tied to several factors, but the Fed is one of the most significant.

With the Fed’s benchmark holding steady, the average rate on a five-year new car loan was 7.1% in April, while the average auto loan rate for used cars is 10.9%, according to Edmunds. At the end of 2024, those rates were 6.6% and 10.8%, respectively.

With interest rates near historic highs and car prices rising — along with pressure from Trump’s 25% tariffs on imported vehicles — new-car shoppers are facing bigger monthly payments and an affordability crunch, according to Joseph Yoon, Edmunds’ consumer insights analyst.

“Consumers continue to face a challenging market, now with added uncertainty of the tariff impact on their next vehicle purchase,” Yoon said. “Prices and interest rates remain elevated, and there’s no fast or easy answer as to how the tariffs will affect inventory levels — and therefore pricing — as buyers try to make sense of an increasingly complex shopping journey.” 

4. Student loans

Federal student loan rates are fixed for the life of the loan, so most borrowers are somewhat shielded from Fed moves and recent economic turmoil.

Interest rates for the upcoming school year will be based in part on the May auction of the 10-year Treasury note, and are expected to drop slightly, according to higher education expert Mark Kantrowitz. Undergraduate students who took out direct federal student loans for the 2024-25 academic year are paying 6.53%, up from 5.50% in 2023-24.

Borrowers with existing federal student debt balances won’t see their rates change, adding to the other headwinds some now face along with fewer federal loan forgiveness options.

5. Savings

While the central bank has no direct influence on deposit rates, the yields tend to be correlated to changes in the target federal funds rate.

“Continued high interest rates are discouraging for those with debt but awesome for savers,” said Matt Schulz, chief credit analyst at LendingTree. 

Yields for CDs and high-yield savings accounts may not be as high as they were a year ago, but the Fed’s rate cut pause has left them well above the annual rate of inflation, Schulz said. Top-yielding online savings accounts currently pay 4.5%, on average, according to Bankrate.

“With all of the uncertainty in the economy right now, it makes sense for people to act now to lock in CD rates and take advantage of current high-yield savings account returns while they still can,” Schulz said.

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