Personal Finance
Social Security is a key election issue, CNBC poll finds
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Most Americans rank Social Security as “one of the top” issues or a “very important” issue determining who they will vote for in the upcoming U.S. presidential election, according to a new CNBC poll.
Social Security reform is also a top concern, according to a separate survey from the Nationwide Retirement Institute. The majority of respondents said that a candidate’s stance on the topic would be a major factor in their vote.
CNBC polled 1,001 registered voters July 31-Aug. 4. Nationwide’s poll, conducted April 19-May 13, surveyed 1,831 adults “who currently receive or expect to receive Social Security.”
Absent action from Congress, the trust fund that pays Social Security benefits is due to run out in 2033. At that time, only 79% of benefits will be payable.
With uncertainty about the future funding of this government program, which guarantees a lifetime income stream in retirement, 72% of adults worry the Social Security system will run out of funding in their lifetime, according to Nationwide.
In the 11 years that Nationwide’s annual survey has been conducted, “we haven’t seen that level of interest in Social Security reform and in wanting to make sure that Social Security is going to be there again,” said Tina Ambrozy, a senior vice president at Nationwide. “That spans across generations; even millennials are one of the most concerned groups.”
Social Security benefits are a major source of income for nearly every retiree. This year, almost 68 million Americans will receive a monthly Social Security benefit, totaling about $1.5 trillion in benefits paid. Retired workers receive an average of $1,918 per month, according to the agency.
Yet research shows that many people don’t understand how the Social Security system works or how they can maximize their benefits. “When individuals don’t understand it, but yet they’re concerned about it, that creates an incredible amount of anxiety,” Ambrozy said.
Here are five key steps to help ease the stress and help you plan how to maximize your Social Security benefits in retirement:
1. Know your full retirement age
Some people may confuse the full retirement age of Social Security — when you’re eligible for 100% of your benefits earned — with the Medicare eligibility age of 65. According to the Nationwide survey, one-third of Americans are uncertain about the age at which they are or were eligible for full Social Security retirement benefits. Here’s what you need to know:
For most people retiring today, their full retirement age is somewhere between 66 and 67.
- If you were born between 1943 and 1954, your full retirement age is 66.
- If you were born in 1960 or later, your full retirement age is 67.
- The full Social Security retirement age gradually increases from 66 to 67 for people born between 1954 and 1960.
2. Determine the impact of when you claim benefits
The earliest age at which you are eligible for Social Security benefits is 62, but you won’t receive full benefits until your full retirement age. If you claim Social Security before that point, your benefits will be permanently reduced. For example, if you claim benefits at 62, and your full retirement age is 67, your benefit could be reduced by as much as 30%. By waiting until full retirement age, you can receive up to 100% of the benefits you’ve earned.
Waiting until age 70 gets you the biggest benefit payments. If you delay claiming Social Security retirement benefits past your full retirement age and up to age 70, you could receive an 8% benefit increase each year. Still, some experts say waiting may not be wise if you’re in poor health or really need the money.
3. Get a benefits estimate from ssa.gov.
Only 11% of Americans who aren’t retired say they know exactly how much in benefits they stand to receive, according to new research from the National Institute on Retirement Security. Yet you don’t have to be retired or near retirement to start gauging how much income in Social Security benefits you may be eligible to receive.
You can double-check your full retirement age and get a statement with your earnings history and estimated retirement benefits from ages 62 to 70 by creating a “My Social Security” account on the Social Security Administration’s website at ssa.gov. If you’re 60 or older and don’t have a “My Social Security” account, you’ll get a statement by mail three months before your birthday.
Even if you’re decades away from retirement, this statement will still give you an idea of how much of your income may be replaced by Social Security, as long as you continue to work and make wages that are in line with inflation.
“An exact amount can’t really be determined until you’re retired, but you can get a pretty reliable estimate each year from the Social Security Administration,” said NIRS research director Tyler Bond.
4. Fix any errors in your earnings history
One important reason to check Social Security benefit statements is to ensure that there are no errors in your earnings history. It’s a good idea to review your Social Security statement annually to double-check your wage history as it is updated, experts say. Mistakes may be less likely for W-2 workers, but if you are self-employed or hold multiple jobs in one year, errors can happen.
To have your earnings record corrected, you can take your W-2 form, pay slip or tax return, including Schedule SE if you’re self-employed, to your local Social Security Administration office. To schedule an appointment or get help by phone, call the agency’s help line at 1-800-772-1213. You may also be able to request a correction online at ssa.gov.
Before entering any information for the Social Security Administration online, make sure the link is to a secure “.gov” website. Don’t just click on email links; instead, enter “SocialSecurity.gov” or “SSA.gov” in the search address bar.
5. Coordinate Social Security benefits with other assets
It’s important to think about what role Social Security benefits will play in your life in retirement.
List all the potential retirement resources available to you, including pensions, 401(k) or other workplace plan savings, individual retirement accounts, or IRAs, and other financial resources, such as proceeds from a home sale. That can help you figure out the role Social Security benefits will play in your overall picture for retirement.
Some experts say 401(k), 403(b) and other workplace savings accounts can serve as a bridge to delay claiming Social Security benefits. For example, if you have a modest amount of 401(k) savings and you plan to withdraw about 4% a year from that account in retirement, you may choose to use that money to pay expenses for a few years and wait to claim your Social Security benefits.
“If you can delay claiming until after your full retirement age, you’ll permanently lock in a higher benefit amount,” Bond said.
If you’re married, it may be beneficial to consider whether it makes more financial sense for the higher-earning spouse to delay claiming Social Security or whether to take it early if one spouse is in poor health. Working through various scenarios with a financial professional may be helpful.
If you’re divorced but were married to a higher-earning ex-spouse for at least 10 years, don’t forget that you may be entitled to the spousal benefit on their record — and you don’t even need to contact them to find out that amount.
Although Social Security was never intended to be the sole source of retirement income, for many retirees it’s all the money they have. Factoring in other potential sources of retirement income should be a part of a broader financial plan that is in place long before you retire, Ambrozy said. “It’s never too early to have a plan.”
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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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