Part 1- What's New with Social Security? Eight Topics We are Watching in 2025

0:00 The topics and opinions express in the following show are solely those of the hosts and their guests and not those of W FOURCY Radio. It's employees are affiliates. We make no recommendations or endorsements for radio show programs, services, or products mentioned on air or on our web. No liability explicit or implies shall be extended to W FOURCY Radio or it's employees are affiliates. Any questions or comments should be directed to those show hosts. Thank you for choosing W FOURCY Radio. Welcome to to Ask Good Questions Podcasts, broadcasting live every Wednesday, six pm Eastern Time on W four CY Radio at W four cy dot com. This week and every week, we will reach for a higher purpose in money and life, as well as a focus on health and wellness. Now, let's join your host, Anita Bell Anderson, as together we start with Asking Good Questions.

1:01 Hello, and welcome to the Ask Good Questions podcast. Today we are starting a three part series on social security. Today is going to be all about what's new with social Security and what's been going on lately. The next one will be for a senior basically for a senior couple, and then the last one will be for women in particular. My plan is for these to be the first Wednesday of the next three months and so, but that won't matter if you're looking at this later or watching the recording, and so let's get started. I do have some slides, So all right, I'm going to be taking you through a bunch of stuff about what in the world is going on with social security right now. I'm sure you've been seeing the news and especially though what this means for you. So here's the topics we're going to be touching on Social Security paid a two point five percent cost of living increase. For those of you already on social Security you know this. We're going to talk about how the COLA is, how it is determined, put it into context, and see what it means for your soci security benefits going forward. Another number affected by the cost of living adjustment is the earnings test threshold. We're going

2:33 to talk about how much you can earn in twenty twenty five without having benefits with held if you claim social Security before full retirement age. I have been teaching soci security classes for many years, and I am going to show you in a many, many different ways why you should wait. All right, But we're going to talk about taxes, and that may be the thing that you know most about, are most aware of, because you've seen the bout you've talked that you've seen about the tax bill that just happened at the beginning of July in twenty twenty five. For those of you on Medicare, we're going to go over the Part B premium for twenty twenty five and see how it's not just such a straightforward number anymore. Will also cover dates for twenty twenty five and twenty twenty six. We're going to give you an update on the status of the Social Security Trust Fund, which you may have seen several things on the internet about, and we're going to discuss some ideas for reforming the system to make it more solvent for the future. And we're going to give you an update about social security claiming strategies. And finally, there's brand new legislation that has taken away the windfall elimination provision, basically things that had to do with government workers and some teachers and those those provisions have gone away. So and I will remind

4:07 us about the reason that you're seeing my email for you is I'm offering you a complementary analysis of when you should take social security. There is a small charge for a professional evaluation, but the PDF value the PDF report for you is complementary. So I will remind you a couple of times. But I thought the easiest way to do that is if you have questions or you want to further explore what this means for you, you can email me at my email address that you see. Okay, So we're going to start with the cost of living adjustment, all right, So that went up two point five percent in twenty twenty five. So security is an inflation adjusted benefit that you have, and it is this number is the most eagerly awaighted number every October when the Sole Security Administration figures out what they're going to do for the new year. And another number is the new earnings test threshold. How what is the income level where you're still charged so security and that is sent to the to the government, all right, and then the higher soci security wage base we're going to talk about that. I'm going to tell you again and again again do not take solid security and still be working while you are

5:38 still under your full retirement age. I'm going to show you what that means. All right, so let's look at what this means. So like, for a two thousand dollars benefit, if you had a two thousand dollars benefit this year, then a two point five percent cost of living increase means to it added fifty dollars to your benefit, So you'd now be receiving twenty fifty twenty fifty. Now what I'm going to tell you is again and again, I'm going to tell you many times that if you're working and you're taking soial security and maybe you're taking money out of an IRA, you have a lot of different ways that you could be getting text. So we're going to discuss this and see if I can sway you to my way of thinking. Here's a little bit of perspective about where this has been. You can see that over the years it changes every single year. Twenty ten, twenty eleven there wasn't any adjustment, twenty sixteen, there wasn't any adjustment. There was a stupid little adjustment in twenty seventeen, but then look at twenty two and twenty three, massive big adjustments, and so here we are at two point five this year. So how this is calculated is it's

7:08 based on something called the consumer price index for all urban wage earners. That's what that means. And it measures the change in a basket of goods and services that a typical urban worker might buy. So it covers food, transportation, housing, entertainment, healthcare, and pretty much everything people spend money on. So this is announced. This cola is announced every October and takes effect with the checks you received the following January, right, and if you haven't started sold security yet, be aware that that cost of living adjustment is added to whatever your benefit was before the calculation for your benefit, all right, And so your benefit will be raised by that cost of living increase, and every year it would it would go up. So there's something also that you need to be aware of, and that's called an earnings test. So you're working in a job, right, and so for twenty twenty five that also is affected by the cost of living increase. As you probably know, if you are under full retirement age and you work and receive soci security benefits, party benefit will be withheld, right, So one dollar in benefits for every two dollars earned over twenty three thousand, four hundred right, that is the threshold. And if you're

8:41 receiving benefits the year that you turn your full retire so you're if you're turning sixty seven this year, then you're and you're working and you're receiving Social Security, then it would be one dollar for every three dollars earned over sixty two than one sixty. So this this new higher threshold comes into play if you're receiving SOID security last year and you turn full retirement age in twenty twenty five. In the months leading up to your full retirement age month, so I'll say you have a birthday in September and you'll be sixty seven in September, then that one in three will be calculated on whatever you're receiving in SOBD security up until that birthday month. Then there won't be any more deduction. However, so security, your work income, any IRA distributions that you're having, all of those are going to be calculated for taxes. And trust me, I'm going to be getting into taxes a little bit later.

9:57 So while we're on the earth tests, I'd like to take a moment to explain the monthly earnings test. Yes, there is something called the monthly earnings test that comes into play the first year that you apply for sole security benefits. So let's say you're under full retirement age, say you're under sixty seven, and you file for soild security this year and you continue to work. Bad idea. But let's say you do that. If you earn more than one nine and fifty dollars in any month, your benefit will be withheld. Okay, then next year you'll be subject to the regular earnings test, the twenty three thy four hundred adjusted for next year's cola. So not only not only are you getting penalized because you are taking it early, but now because you're under sixty seven. So it's just a bad idea all the way around. I'm going to try to convince you that generally my recommendation is to wait until you stop working to apply for Social Security so you don't have to deal with the earnings test. But there may be exceptions. I get that, and we can certainly discuss your individual circumstances if you contact me. You've got my email address there, all right.

11:25 So moving on payroll taxes. In twenty twenty five, they didn't really the taxable earnings, well, the taxable earnings went up to one hundred and seventy six one hundred. So if your income is one hundred and seventy thousand, then Social Security would be taken out up to that one hundred and seventy thousand number, and then no more Social Security taxes would be taken out. All right, So let me see it get to the next slide here. Nothing changed with the bill that just happened. The tax rate remained six point two percent each for employee and employeerer, so if you're self employed, it's twelve point four percent for self employed people. And there wasn't any change for Medicare taxes on undred one point four or five percent that also did not change. So but the maximum sold security tax that the amount that's taken out of your paycheck for sold security is is going to be at that threshold of one hundred and seventy six one hundred.

12:37 I'm going to have something to say about that a little bit later when we talk about the future. So let's let's let's say an example of the bill that just happened. Right. You all probably are very aware on July fourth that President Trump signed in a new bill into law. It does not eliminate taxes on Social Security benefits. It just seems that way, all right. So basically a quick example to help you is, let's say there's a married couple. They're both aged sixty five plus, and they are under the one hundred and fifty thousand dollars income limits.

13:24 So in order to get this deduction, you have to be under one hundred and fifty thousand dollars in income. The maximum total standard deduction is now forty six thousand, seven hundred. How in the world did we get there. There's a base standard deduction of thirty one thousand, five hundred, so this is for doing your taxes right. There's a base standard deduction. Then there's a senior extra deduction of thirty two hundred plus. Now there's a bonus deduction of twelve thousand for six thousand for the husband's six thousand for the wife. This deduction, the way it's just been written into law, is available whether a taxpayer takes the standard deduction or itemizes their deductions. This is probably, you know, it's a good thing to probably think that it could possibly eliminate the taxes on Social Security benefits for the vast majority of seniors. During these years. This is only twenty twenty five to twenty twenty eight. We're going to see what happens in twenty twenty eight. Huh, So talk to your accountant, talk to your CPA, see how this might affect you personally. All right, So taxation of seniors, you know, So basically what I'm saying is tax your Social Security benefit is still going to be factored in.

14:53 And if you notice, really most married filing jointly couples with provisional income of over forty four thousand, you're going to be paying taxes. Or now what we should say is tax would be figured on up to eighty five percent of the total benefit that you and your spouse receive. If you're married, filing separately and living with a spouse, it's eighty five percent. And really single singles, they it's even worse for them over thirty four thousand in income, it's going to be up to eighty five percent. So just realize, so security is still being figured into how much income you have, right, and then there's another aspect that is required minimum distributions that now starts at It wasn't legal or not, it was, it was signed into law.

15:50 This year that is aged seventy three. You don't have to worry about this until you're age seventy three. There is a new IRS life Expectancy table that allows you to take a little bit less and just realize that between if you're working still. And the reason I know this is because my husband a retired pharmacist. He worked until he was seventy five, and he had rm DS and he had Social Security and he had his work income. So r and DS and all these other kinds of income can bump you into a higher tax bracket. Just realize that that is possible to happen. So one of the things that you can do to head off taxes on Social Security benefits is convert to a wroth. If you have IRA money, considered taking at least a portion of it and converting it to a wroth. You will pay taxes now on that distribution. But then once it's in a wroth and you take a wroth for in come later on, there's no taxes then you when it comes out. So I'm going to tell you again and again and again also to delay sol Security, you're going to reduce the number of years your income is subject to tax Okay, so that is something that I've just seen again and again and again. All Right, we're going

17:21 to talk about Medicare a little bit. So I keep telling people, you know what, just figure that we're going to we're going to be paying two hundred dollars a month for Part B premium before we know it. And it's now one hundred and eighty five a month. Last year, if you're curious, last year it was a one's seventy four point sevente hundred and seventy four dollars and seventy cents. So that's why I'm saying, I don't I don't. Don't be surprised if you see two hundred dollars a month for Part B premiums time soon. So if you are on Soial Security, this sometimes, this whole timeless provision, I'm not gonna spend a lot of time on it, but it does apply when it doesn't cover the increase in the Part B premium, and it didn't apply this year.

18:19 Soial Security's cola was two point five. But a lot of times that cost of living increase that you give your Sole Security, it doesn't cover your Medicare premium going up. Because this year, the Medicare premium went up by five point nine percent. Huh, that's just the way it works. So there's also something for people with that are blessed with higher income. You may be paying more in your Part B premiums based on your income, so you can appeal that the income has changed due to a life changing event such as retirement and unusual capital gains is not grounds for an appeal. But let me give you an example. You may not be able to see this, but over on the left is the income levels, and most people like for a joint couple up to two hundred and twelve thousand income, you're going to pay one hundred and eighty five dollars a month on Part B premium. Now, the Part B premium also comes out of your solid security if you're taking so security. If you are sixty five, but you are going to intelligently wait until age seventy to take SOB security, but you're starting Medicare at age sixty five, then that Part B premium is just taking out of your checking account. You know, you just do an automatic deduction for the health insurance premium, but that's

19:51 one hundred andy five. But you can see on the right hand side is the Part B, B and D premiums the par art and the party is prescription. It can go up significantly. But you know, alike, for a three hundred and thirty four thousand income level, you'd be paying four hundred and five dollars a month, right, so just be aware that that can happen for higher wagerners. So here's some dates to watch. I'm going to talk to you first about next year. If you are already in a Medicare advantage plan and you're not liking it, you can well, first of all, you could you could make a change in the fall when the open enrollment is, but January thirty first, This is just to let you know.

20:45 January thirty first to May thirty first is called the disenrollment period. You can switch or maybe something changes. You can switch from a Medicare advantage plan to original Medicare. Make sure that you can get a supplemental policy because sometimes you may be subject underwriting and so sometimes people miss the Medicare general enrollment period. So if you miss the initial or a special enrollment period maybe because you were retiring, you can enroll in Medicare now. So coverage starts the month after the enrollment Okay, so then most people are going to be interested in this. The October fifteenth December seventh annual open enrollment period. You can switch Medicare advantage plans if you have original Medicare, you can switch drug plans. And just be aware that these plans change every year in a lot of cases. So if you have health ish use and you drop your Medicare advantage plan, you may not be able to get a medic gap policy. So be sure to get that lined up first if you're thinking about dropping Medicare advantage plans or doing something different. All right, are you wondering what's

22:19 going to happen with Social Security in the future. Are you wondering if it's going to be there? It's yes, I'm a financial advisor, and of course this is my opinion, but yes, I believe it is going to be there. And here's I'm going to explain why. So social Security was it was basically designed as a page you go system. Payroll taxes from current workers go into a trust fund and are immediately paid out to current retirees. Right because baby boomers have been in their week earning years, the trust fund has accumulated more than needed for current benefits.

23:09 Right now, the trust fund holds about two point seven trillion dollars that was actually as of about six months ago, which is invested in special issue treasury securities. As baby boomers start retiring, these trust fund assets will gradually be drawn down, right, So that's what you may have heard about in the past. So this might be hard to see, but as a graph that shows how over the next seventy five years, costs will begin to exceed income. There are enough reserves that the system will be able to pay one hundred percent of promise benefits until twenty thirty four.

23:53 That's really not that far off from us now, is it. After that, if nothing is done, and that's the operative word, if nothing is done to reform the system, income will be sufficient to cover about eighty one percent of promised benefits. So I have been clamoring at Congress people forever, but let's talk about, well, what it would take to resolve to restore solvency to the system. It's not in eminent danger, but most people agree that the earlier reforms are instituted, the less painful that they'll be on everyone. It's really just a math problem. Right, that involves an increase in revenue, a cut in benefits, or a combination of the two. Right.

24:48 Here's a few of the ideas that have been proposed. There's I don't know. I think there's about twelve or thirteen ideas on the table, but I don't know if anybody's doing anything about them. One is to increase the maximum earning subject to soil security tax. I have talked about this in my workshops that I've done over the years for a long time. Currently, one hundred and seventy six one hundred earnings is subject to the six point two percent tax paid by you and by your employer. One way to shore up the system is to raise the earnings cap or eliminate it altogether. So Another reform proposal calls for raising the full retirementation. Another thing I've guessed could possibly happen. Currently, full retirement age is really for most of the people looking at Social Security now, it's sixty seven. That would be for people born in nineteen sixty or later. An argument in favor of raising the retirementations that people are living longer. An argument against it is that people whose occupations involve hard physical labor really can't work until age seven. Still, another reform proposal would change the benefit formula so that future increases would happen at a slower pace, So that would affect the benefits of future retirees, right, and some are talking about

26:18 changing the formula for cost of living increases. This could give retirees a smaller benefit increase going forward, although the changes are expected to be minimal. So that's a lot to digest. So the question is is Congress going to do anything about this? Given that there are lots of ways the social curity system could be reformed, is Congress likely to address it this year? I don't think so. Other issues are taking priority And because of that, two point seven trillion Trust Fund benefits are not in immediate danger.

27:00 So the last time Congress made major changes to the Social Security system was nineteen eighty three, and guess what. At that time, the trust fund was within a few months of running out of money. I hope they don't wait. I hope they don't wait like that. But theoretically Congress has until twenty thirty five before they have to worry about that happening. Right, we'll see, send a letter to your Congressman. Okay, so here's some claiming strategies. There's a couple that have just gone away, so I'm not even dealing with that. The most important one for you is lower earning spouses. Now, it's still possible for a lower earning spouse to receive fifty percent of the higher earning spouse's PIA. What's that primary insurance amount? And so that would mean the lower and your spouse would have to be less than fifty percent of the higher ary spouse's benefit.

28:11 So if she is claiming before her full retirement age, don't do that. But if she is, the benefit will be less than fifty percent. If she's going to get deducted on that, I am glad. I'm happy to run a spouse of planning analysis for you to show you when would be the best time for each of you to claim your respective benefits. So please email me to talk about the specifics. I need a couple of pieces of information for you and I can run that benefit for you. All right, benefit analysis. So this that we talked about, this windfall elimination provision was basically repealed. It had to do with government workers and it had to do with some teachers and so I can spend a lot of time on that. But basically that kind of takes care of what's new with soil security, And I'd like to offer you a Social Security check up in the form of an analysis. This goes into actually the computer runs thousands of different ways this could happen for you.

29:27 But we found that sometimes people miss out on benefits just because they basically have no idea. They don't know they can claim them. Here's some examples for you. This is the example of a married person who never added on her spousal benefit after her husband filed for his benefit. Guess what, Sole Security is not going to come after you saying hey, you're missing a benefit. No, they're not going to do that. So if she has been earning her benefit, if she had started her benefit and then her husband had waited, thankfully, and he now has his benefit going, she's going to have to call SOB Security and say, hey, I think i'm I'm do a spousal benefit on his income. So she has to apply for the spousal benefit, which she didn't know to do. So our analysis reveals things like that. Here's another one. How about a divorced person who didn't know she could claim a benefit off her ex spouse. Right. So now, not everyone can do this because your own benefit, if you've been working, your benefit may be higher than your spouse's or your expouses But it's always good to check, and our analysis can help divorce people find out if they're receiving all the benefits that they are entitled to. Right Okay,

30:58 here's another example. A divorced person whose expouse is now deceased, making her eligible for a survivor benefit that is higher than her own benefit. Right. Well, that if they were married for over ten years, and she may be able to get a survivor benefit based on that expouse's earning record, which is higher than her own. Right, so her spousal benefit needs to be less than fifty percent of his. But again, if this is your situation, we can run an analysis for you to figure out if you've been missing something, so we can look at possible benefits, we can explore claiming strategies. We can see how solid security fits into the rest of your retirement income plan, which is super critical and that so security analysis is complementary.

32:05 I will you contact me email me to set up the what we need for getting that and I will email you the PDF analysis if you would like a professional evaluation. If it's just, you know, pretty confusing, then there is a small cost for that, but we can discuss that when we chat. So thank you so much for joining me today. I hope this helps give you a little bit of an idea or maybe calm your fears that sole Security is going away. Like sometimes you see all kinds of crazy things on the internet, so it is not going away. It could change, but it is not going away. Thank you today for joining us for what's new with SOB Security on the Ask Good Questions Podcast.

33:02 Today's episode is over, but we did Ask Good Questions again, didn't We don't miss out as we broadcast live every Wednesday six pm Eastern Time on W four CY Radio at w fourcy dot com. Joined Nina Bellm. We're saying next week for more conversations with experts on finances, retirement, behavioral finance issues, health and wellness and more. Until then, remember to ask good questions.