Tag: Social Security

‘I believe she made a big mistake’: My wife put her paycheck into a bank account with her inheritance. Do I now own 50% of those funds?

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“Am I entitled to half of her Social Security income?” (Photo subjects are models.) – Getty Images/iStockphoto

Dear Quentin,

I understand that, in a divorce, a spouse is not entitled to money that their spouse inherited if those funds were not commingled in a joint account. I’m in a situation where my wife inherited money after we were married. But I believe she made a big mistake: She put it into her own account.

For about 20 years — unbeknownst to me — she had money from her paycheck deposited into the same account that held her inheritance. Now she’s on Social Security, and the entire amount is also deposited into that same account each month.

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I’m still working, and we’ve always filed joint tax returns. No tax is being withheld from her Social Security income, so my tax refund each year is about 60% less than it would be if our joint tax return did not include the Social Security income.

If we were to divorce, would I be entitled to half of her separate account, given that she has commingled joint income for 20 years with the inherited amount? Am I entitled to half of her Social Security income, just as she would be entitled to half of mine once I begin taking it?

Husband in Texas

Related: ‘He forced me to take Social Security at 62’: My husband inherited millions, but never gave me a penny. If I divorce him, would I get any of it?

Money transferred from a joint bank account into a separate bank account with your wife’s inheritance does not have the same commingling effect. – MarketWatch illustration

Dear Husband,

I have some good news — for your wife.

Your wife should manage her inheritance appropriately, especially given that your marriage has seemingly seen happier days and you are considering a divorce. She appears to have done just that, as you have been following the paper trails of money going in and out of accounts. I can’t blame you for that, but you’re not sitting on a golden goose.

Money transferred from a joint marital bank account into a separate bank account containing your wife’s inheritance does not commingle your inheritance. Texas is one of nine community-property states, along with Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Washington and Wisconsin.

Cash transferred from a bank account with separate marital property into a joint bank account is considered commingled. Separate marital property might include an inheritance, funds from certain personal-injury claims, money earned prior to the marriage or assets clearly purchased with money from those aforementioned sources.

There are other ways an inheritance could be commingled, according to the law firm Hailey-Petty, which has offices in San Antonio and Austin, Texas. “If inheritance funds are used to purchase or invest in property that is titled jointly or used for the benefit of both spouses, this can also lead to the inheritance being considered marital property.”

The law firm continues: “If inheritance is used to significantly improve marital property — like funding a major renovation of a jointly owned home — that portion of the inheritance can become marital property. Some states,” it adds, “have specific conditions under which an inheritance can be considered marital property.”

Spousal benefits

A person cannot receive Social Security spousal benefits until that spouse claims Social Security themselves. The amount the person receives would depend on whether the spouse started claiming at 62, or whether that person waited until full retirement age or maxed out their benefits by waiting until age 70 to claim.

Just so we’re clear: If you claim spousal benefits of up to 50% of your wife’s Social Security, it would not affect her benefits. If you get $1,500 and your wife gets $5,000, you can claim on her record and get $2,500, but you don’t get $4,000; you get the higher of the two benefits. The person receiving the higher benefits will not be affected.

If you wish to receive spousal benefits after your divorce, you must be at least 62 years old and unmarried and you must have been married to your ex-wife for at least 10 years. “You can apply for benefits on your former spouse’s record even if he or she hasn’t retired, as long as you divorced at least two years before applying,” according to the Social Security Administration.

Should you decide to remain married, you’re entitled to receive 50% of your wife’s benefit, assuming she is the higher earner. If you are the higher earner, the same is true for your wife. It’s an equal-opportunity policy. As you don’t say who is the higher earner, it’s impossible to say who would (or will) ultimately benefit.

To be eligible for a spouse’s benefits, “you must be 62 years of age or older or any age if you have a child who is younger than 16 in your care or has a disability and is entitled to benefits on your spouse’s record,” the SSA says. “If you choose to receive your spouse’s benefits before you reach full retirement age, your payment will be permanently reduced.”

Ultimately, your wife’s inheritance is as safe as houses.

More columns from Quentin Fottrell:

‘My husband blew a gasket’: I bought a $20,000 Toyota SUV using financing. My spouse said, ‘Pay it off immediately.’ Did I get a bad deal?

‘I’m trapped between warring siblings’: My late father left a ledger with $80,000 in unpaid loans to my brothers. Can they be forced to pay?

‘This flies in the face of my morals and ethics’: My father cut my sisters out of his six-figure estate. Should I push back?

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October 8, 2024
Social media posts misinterpret voter data

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As the 2024 presidential election draws closer, social media users are crying foul over what they claim is an instance of voter fraud in Missouri.

An Instagram reel shared a screenshot from X that claimed state voter registrations spiked unusually.

“Missouri registered 78,421 in just ONE WEEK of February of this year,” the screenshotted post claimed. “Out of that number, 23,253 were DEAD PEOPLE! Here we go, AGAIN!”

This post was flagged as part of Meta’s efforts to combat false news and misinformation on its News Feed. (Read more about our partnership with Meta, which owns Facebook, Instagram and Threads.)

The screenshot cited Tim Pool, a conservative commentator and podcaster, as its source.

Pool talked about the registrations during an April 3 episode of his podcast, saying the figures came from the Social Security Administration’s Help America Vote Verification database for the week of Feb. 17.

“These are voter registrations where someone is trying to use a Social Security number and a name, and when it came back to the (Social Security Administration), they said that person is dead,” Pool said.

He questioned how it didn’t strike officials as “odd” that nearly a third of the people who tried to register to vote in Missouri that week were not alive. (Pool is one of six Tenet Media content creators whose work is under scrutiny following a federal indictment alleging two employees of Russia-owned broadcaster RT paid Tenet to push pro-Russian propaganda.)

Social Security Administration and Missouri secretary of state officials said Pool’s framing of the data was incorrect.

The Help America Vote Verification database shows the number of verification requests sent by a state’s election office to confirm a person’s eligibility to vote — not the number of people who registered to vote in a given week — a Social Security Administration spokesperson said in a statement sent to PolitiFact.

“Under the Help America Vote Act, when a voter registrant does not have a driver’s license, states are permitted to submit the voter registrant’s name, date of birth and last four digits of their Social Security number to the Social Security Administration for verification,” the statement said.

Forty-three states use the database, which tracks the total number of verification requests processed in a given week. It breaks down how many requests can be matched to people who are alive or dead. It does not tally the number of people who are registered to vote or who are trying to register to vote.

In a previous fact-check related to the database, PolitiFact found that states can run a verification request for a person multiple times, contributing to the overall numbers.

JoDonn Chaney, communications director for the Missouri secretary of state’s office, told PolitiFact that the state’s local election authorities have a mandate to clean their voter rolls. As part of that process, they would periodically ping the database to determine who should be removed, based on whether they had left the state or died.

“We don’t have that information of people attempting to register based on the number (referred to in the claim),” he said. “We don’t see that as people attempting to register to vote.”

Chaney provided a month-by-month breakdown of the state’s number of registered voters, showing the video’s claim was off base.

Missouri had 4,270,843 voters in January and 4,268,935 million in February — a decline of 1,908. The total number of voters in the state dropped by 574 people in March to 4,268,361.

The state in April had an increase of 20,250 registered voters, bringing the total number for that month to 4,288,611.

Madison Walker, a Missouri secretary of state’s office communication specialist, said there’s no specific reason for the spike, but the timing coincided with presidential caucuses and general municipal elections.

The state never had 78,421 people register to vote within a single week.

Our ruling

An Instagram reel claimed data from the Social Security Administration showed that Missouri “registered 78,421 in just one week of February of this year” and that “23,253 were dead people!”

The numbers cited in the claim come from the administration’s Help America Vote Verification database, which states use to verify people’s voter information. States can send multiple verification requests for a single person, which adds to the overall numbers shown in the database.

These numbers don’t represent voter registrations.

We rate this claim False.

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October 4, 2024
Social Security will announce the 2025 COLA within days. Here’s what to expect.

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The roughly 70 million people who receive Social Security payments will soon learn how much they’ll receive in their 2025 benefit checks, with the program’s annual cost-of-living adjustment (COLA) to be announced within days.

Each fall, the Social Security Administration sets its annual COLA based on the recent rate of inflation, part of an overhaul to the program that began in the 1970s that ensures senior citizens and other beneficiaries aren’t losing purchasing power in the face of rising prices.

When will the 2025 Social Security COLA be announced?

Typically, the Social Security Administration announces its annual COLA on the same day the Labor Department releases its September inflation report, with the benefits announcement released shortly after the inflation data.

The September Consumer Price Index report is scheduled to be issued on Thursday, Oct. 10.

What will the COLA be for Social Security in 2025?

The 2025 cost-of-living adjustment is forecast to come in at about 2.5%, according to the Senior Citizens League (TSCL), an advocacy group for older Americans.

That will mark the smallest COLA since 2021, when seniors received a 1.3% adjustment due to the pandemic’s low rate of inflation. Because inflation surged in 2022 and 2023, Social Security provided unusually large COLAs for those years, at 5.9% and 8.7%, respectively.

Seniors received a 3.2% COLA for the current year.

How would that impact Social Security benefits?

The average Social Security check for retirees stands at $1,907 in 2024, according to the Social Security Administration.

If the agency announces a 2.5% COLA increase for 2025, as forecast, the typical benefit check would rise by about $48 a month, for a total of $1,955 per payment.

What is the VA benefits COLA increase for 2025?

Earlier this month, Congress passed a new law that ties veterans’ benefits to Social Security’s cost-of-living increase. Called the Veterans’ Compensation Cost-of-Living Adjustment Act of 2024, the law directs the VA to increase veterans’ benefits by the same inflation adjustment percentage as Social Security payments.

“Boosting our veterans’ hard-earned benefits to keep pace with the cost of living is a necessary cost of war,” said Sen. Jon Tester, a Democrat from Montana who co-sponsored the bill, in a statement.

The COLA increase for VA benefits will apply to disability payments, clothing allowances and dependency and indemnity compensation for surviving spouses and children, according to Military.com.

Based on the Senior Citizens League’s forecast, those VA benefits would increase by 2.5% next year.

What is the current rate of inflation?

Inflation has cooled considerably after hitting a 40-year high of 9.1% in June 2022. The Federal Reserve engineered a flurry of rate hikes that have helped to drive down inflation, which stood at 2.5% on an annual basis in August — its lowest in three years.

Inflation is expected to continue to cool, with economists forecasting that the rate of price increases slipped to 2.3% in September, according to financial data firm FactSet.

The Social Security Administration sets its annual COLA based on inflation during the third quarter, or from July through September.

The agency takes the average inflation rate over that period from what’s known as the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, which tracks spending by working Americans. Because inflation has receded during the past several months, the 2025 COLA is expected to be lower than in prior years.

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Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports.

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October 4, 2024
Here’s how much your Social Security benefits could be cut without a fix

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Social Security is edging closer to a financial cliff that could eventually lead to sharp benefit cuts for 70 million Americans, with a typical couple facing an annual payment reduction of $16,500 in 2033, according to a recent analysis from the Committee for a Responsible Federal Budget.

A middle-income single worker would see their benefits cut by $8,200 per year, according to the group, a nonpartisan advocacy organization focused on fiscal issues.

The analysis is based on a dual-income couple with medium career earnings, or individual annual pay of about $63,000 a year. Notably, it also assumes that the Social Security system isn’t repaired before its trust fund is projected to become insolvent in 2033 — an outcome many experts have long said is unlikely given the political consequences to both parties of slashing benefits.

The main Social Security fund, called the Old-Age and Survivors Insurance (OASI) Trust Fund, is a $2.6 trillion pool of money that funds benefits and other program costs. Because Social Security currently is paying out more in benefits than it receives through taxes, thanks partly to the massive waves of retiring baby boomers, the agency is now tapping the trust fund to provide the benefits promised to retirees.

Clock is ticking

But without changes, the trust fund is slated to be drained by 2033, which would result in an automatic 21% cut to beneficiaries’ monthly checks, regardless of marital or income status, the CRFB analysis found. That could prove devastating to both current and future retirees, with many of the former already financially stretched and given that 4 in 10 seniors live solely on the average Social Security monthly benefit of $1,907.

“The result would likely lead to a spike in poverty rates for older Americans,” Shannon Benton, executive director of the advocacy group Senior Citizens League, told CBS MoneyWatch. “Given that low-paid workers are less likely to save for retirement compared to higher-income Americans, they are often more reliant on Social Security in their later years.”

Social Security would be further destabilized if it takes longer for lawmakers to fix program, noted Chris Towner, policy director at the CRFB.

“There is a cost of waiting to fix the program,” he said. “It could be fixed right now with a 27% tax increase or a 21% benefit cut to all beneficiaries, while waiting would make the tax increase grow to 32% and the cut to 25%.”

Social Security cuts by income

Although Social Security faces fiscal challenges, many Americans misunderstand what insolvency for the program would mean, experts caution. For instance, about 8 in 10 U.S. adults worry that Social Security “won’t be available” when they are old enough to receive it, a recent Gallup poll found.

But Social Security isn’t going anywhere, emphasized Nancy Altman, president of Social Security Works, an advocacy group for the program. Even if the trust fund is depleted, the program will continue to be funded by workers’ payroll taxes and will pay out about 79% of promised benefits, she noted.

“There’s a lot of misinformation, like the program will just disappear, and that isn’t going to happen,” Altman said. “The best way to look at it is that [possible insolvency] is an action-forcing event. It’s not that they will get no benefits, but Congress really needs to act” to avoid cuts.

If the trust fund is depleted, retirees and other beneficiaries would still get checks, although their payments would deliver about 79 cents on every $1 of promised benefits due to the funding shortfall.

That means a single middle-income worker, with earnings of about $63,400 per year, would see their Social Security payment decline from $3,275 per month prior to insolvency to about $2,592 per month if the trust fund isn’t shored up. On an annual basis, that’s a loss of $8,200 in Social Security benefits.

So how likely are Social Security cuts?

Major benefit cuts are extremely unlikely to become a reality, Altman of Social Security Works predicted. That’s partly because Social Security is viewed as a “third rail” of politics — one that could motivate many Americans to vote against lawmakers perceived as fiddling while the program burns.

“It’s literally inconceivable that Congress wouldn’t act,” Altman said. “Every single member of Congress would be voted out — people would be so furious.”

Already, there are a number of proposals floated by lawmakers on how to buttress Social Security, ranging from either boosting taxes to cutting benefits, or a mix of the two ideas.

So far, Vice President Kamala Harris and former President Donald Trump have both vowed to protect Social Security, but neither has put forward a detailed plan about how they would do so, noted Benton of the Senior Citizens League.

“The Senior Citizens League would like to know what the presidential candidates would do, if elected, to address the looming insolvency issue,” she said.

Range of fixes

Trump has proposed eliminating income taxes on Social Security benefits, but his plan would actually worsen the program’s financial outlook because those taxes currently directly fund benefits. Without those taxes, Social Security would be forced to cut benefits a year earlier than currently forecast, experts say.

What’s clear, by contrast, is that to avoid cutting benefits in 2033 Congress will have to take action to bolster Social Security. Some lawmakers have proposed lifting the income cap on Social Security taxes. Currently, income over $168,600 isn’t subject to the payroll tax, which means that lower- and middle-income workers bear the brunt of funding the program.

Meanwhile, some Republicans have proposed hiking the U.S. retirement age to 70, arguing that Americans are living longer and so should retire later. But many workers are forced to retire far earlier than 70, often due to health issues or because their jobs are cut and they can’t find new work.

“Eliminating the shortfall is a means to an end, and the end is to provide economic security,” Altman said, noting that she and other experts would like to see the program not only shored up, but its benefits formula made more generous as well. “Most experts think the benefits are too low.”

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Aimee Picchi

Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports.

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September 9, 2024
All Social Security Retirees Should Do This on Oct. 10

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Millions of seniors today collect monthly benefits from Social Security. And many people rely on those benefits to cover the majority — or all — of their retirement expenses.

In recent years, living on Social Security alone has been particularly tough due to rampant inflation. But thankfully, inflation is starting to cool to the point where the Federal Reserve is finally talking about interest-rate cuts, and prices are starting to moderate.

Image source: Getty Images.

But while a slower pace of inflation is a good thing for seniors on Social Security, it could also have a less desirable consequence — a stingy cost-of-living adjustment (COLA) for 2025.

If you’re curious to know what next year’s Social Security raise will amount to, you should mark your calendar for Oct. 10. That’s when the Social Security Administration (SSA) is expected to make an official 2025 COLA announcement. But it’s also important to prepare for the fact that next year’s Social Security COLA is likely to come in lower than 2024’s unless inflation takes an unexpected turn in September.

What we know about the 2025 Social Security COLA so far

Social Security COLAs are based on third-quarter inflation data, which explains why we don’t have an official number just yet. We need to wait for September’s Consumer Price Index reading to become available, and that won’t happen until Oct. 10.

However, based on recent inflation data, there are estimates of what next year’s Social Security COLA could look like. The nonpartisan group The Senior Citizens League (TSCL) is projecting a 2025 COLA of 2.57%. That’s considerably lower than the 3.2% raise seniors on Social Security received this past January.

But again, inflation was also higher in late 2023 than it’s been in recent months. So while a smaller 2025 COLA may be disappointing, it also makes sense.

Of course, there’s room for that 2.57% projection to wiggle, based on incoming inflation data. But based on how things have been trending, that number is more likely to shift downward than upward.

Take action once an official announcement hits

You can check the SSA’s website on Oct. 10 for news of your 2025 COLA. At that time the SSA should also release other updated numbers, like the earnings-test limit for 2025, the maximum monthly benefit, and the wage cap for Social Security tax purposes.

If 2025’s COLA worries you, then you’ll want to take action before the start of the new year. Specifically, if you think you’ll struggle to pay your bills in 2025, you should assess your spending and see if there’s any room to cut corners. You may also want to consider relocating somewhere less expensive to stretch your benefits further.

If you have a larger home that’s costly to maintain, downsizing could be another big money-saver. And if you’re already living as frugally as you can bear to and you don’t want to move (or don’t think it’s feasible), see if it’s possible to pick up some occasional gig work. If you’re able to earn an extra $100 to $200 a month, that could easily make up for a smaller Social Security COLA.

At this point, you don’t have to wait much longer to see what your 2025 Social Security raise will come to. But you may want to brace for a lower number than you’ve seen in recent years.

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September 8, 2024
Social Security offices forced to close because of unspecified tech problem

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Changes for some Social Security recipients

What to know as Social Security recipients have to update their online accounts

02:38

A technology problem on Friday forced the Social Security Administration to close offices, while also hampering its ability to offer online services.

The government agency cited a “hardware issue” that it said is hampering its ability to provide services both in person and on its website. Reports of people being unable to access their My Social Security accounts surged starting Friday morning and continued into the afternoon, according to DownDetector.com.

SSA is experiencing IT difficulties today providing personalized services. For more information, visit: https://t.co/p07PcnWCwY.

— Social Security (@SocialSecurity) September 6, 2024

The Social Security Administration said its offices are closed today to in-person services. The agency is continuing to answer general questions by telephone.

Mark Hinkle, press officer with the Social Security Administration, said in a statement Friday evening that the agency has resolved the tech glitch affecting personalized services. In-person services and full telephone support will resume on Monday, he noted.

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Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports.

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September 6, 2024
Tim Walz vs. JD Vance: What the 2024 presidential running mates could mean for your wallet

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Democratic vice presidential candidate and Minnesota Governor Tim Walz (L), and Republican Vice Presidential candidate Sen. JD Vance (R-OH).

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Housing

Affordable housing is an important topic for many Americans and both Walz and Vance have addressed the issue.

In May 2023, Walz signed housing legislation that included $200 million in down payment assistance. The bill also had $200 million for housing infrastructure and $40 million for workforce housing.

“We expect Walz to be an advocate for demand-side approaches to housing,” Jaret Seiberg, analyst at TD Cowen wrote in a July statement. “These are the type of housing ideas we would expect in a Harris administration,” she wrote.

Demand-side approaches to housing aim to help individual households by improving housing quality or reducing monthly housing costs.

Meanwhile, Vance, who is also a proponent of affordable housing, highlighted the issue in his Republican National Convention acceptance speech and along the campaign trail.

“Prior to running for Senate, Vance argued that one key to tackling poverty is to address affordable housing,” and he has opposed institutional ownership of rental homes and Chinese buyers for U.S. real estate, Seiberg wrote.

Child tax credit

Without action from Congress, trillions of tax breaks enacted by Trump are scheduled to expire after 2025, including the child tax credit, which will drop from $2,000 to $1,000 per child.

Congress in 2021 approved a temporary expansion of the child tax credit, including upfront monthly payments, which reduced the child poverty rate to a historic low of 5.2% for 2021, according to a Columbia University analysis.

Following the federal policy, Minnesota enacted a refundable state-level child tax credit in 2023, which Walz described as “signature accomplishment.”

Minnesota’s new child tax credit is unusual in its narrowness, but it is the most generous in the nation for low-income households.

Jared Walczak

Vice president of state projects at the Tax Foundation

“Minnesota’s new child tax credit is unusual in its narrowness,” said Jared Walczak, vice president of state projects at the Tax Foundation. “But it is the most generous in the nation for low-income households.”

However, a permanent federal child tax credit expansion could be difficult, particularly amid a divided Congress and increasing concerns over the federal budget deficit.

Walz’s campaign did not respond to CNBC’s request for comment.

Senate Republicans blocked a federal child tax credit expansion last week, and Sen. Mike Crapo, R-Idaho, the ranking member of the Senate Finance Committee, described the vote as a “blatant attempt to score political points.”

Despite the failed procedural vote, Crapo voiced openness to negotiating a “child tax credit solution that a majority of Republicans can support.”

Democrats scheduled the vote partially in response to Vance, who has positioned himself as a pro-family candidate. Vance was not present for the Senate vote, but has expressed support for the child tax credit.

Vance’s campaign did not respond to CNBC’s request for comment.

Student loans

Vance has spoken out against student loan forgiveness policies.

“Forgiving student debt is a massive windfall to the rich, to the college educated, and most of all to the corrupt university administrators of America,” Vance, a Yale Law School graduate wrote on X in April 2022. “Republicans must fight this with every ounce of our energy and power.”

Outstanding education debt in the U.S. stands at around $1.6 trillion. Nearly 43 million people — or 1 in 6 adult Americans — carry student loans. Women and people of color are most burdened by the debt.

Vance does seem to approve of loan forgiveness in extreme cases. In May, he helped introduce legislation that would excuse parents from student loans they took on for a child who became permanently disabled.

Jane Fox, chapter chair of the Legal Aid Society Attorneys union, UAW local 2325, said it was hypocritical and incorrect of Vance to frame debt relief as a benefit to those who are well off.

“Student debt forgiveness is a working-class issue,” Fox said. “Those in the 1% who went to elite institutions and then worked in private equity as Senator Vance did rarely need debt relief.”

Vance’s campaign did not respond to CNBC’s request for comment.

Meanwhile, Walz, a former school teacher, has supported programs to alleviate the burden of student debt on people, said higher education expert Mark Kantrowitz.

He signed a student loan forgiveness program for nurses into law in Minnesota, Kantrowitz said, as well as a free tuition initiative for low-income students.

“As my daughter prepares to head off to college next year, affordability and student loan debt are at the front of our minds,” Walz wrote on Facebook in 2018. “Every Minnesotan deserves a shot at a great education without being held back by soaring costs and student loan debt.”

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August 10, 2024
Trump wants to cut income taxes on Social Security. Here’s how that would impact your benefits.

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Former President Donald Trump is promising to eliminate taxes on Social Security, a vow aimed squarely at the 67 million Americans who receive monthly benefit checks from the retirement and disability program.

“Seniors should not pay taxes on Social Security and they won’t,” Trump said at a Wednesday campaign rally in Harrisburg, Pennsylvania.

Such a pledge could be be a potent campaign plank at a time when poverty among seniors is on the rise, according to the National Council on Aging, and the U.S. Government Accountability Office has found millions of older workers are nearing retirement without a penny in savings. Currently, about 40% of Social Security recipients pay federal income taxes on their benefits, according to the agency.

But cutting income taxes on Social Security income would ultimately harm the program by cutting off one of its funding sources – taxes — which in turn would likely hasten the insolvency of its trust funds, experts told CBS MoneyWatch. If that occurred, the Social Security Administration could be forced cut make larger benefit cuts a year earlier than is now forecast.

“It really is, in some ways, Trump advocating defunding Social Security,” Nancy Altman, president of Social Security Works, an advocacy group for the program, told CBS MoneyWatch. “It’s a sleight of hand — it’s giving with one hand and taking with another.”

The Trump campaign didn’t respond to a request for comment.

Payroll taxes, the FICA taxes taken out of workers’ paychecks, fund the bulk of Social Security. But about 4% of its financing stems from the income taxes that recipients pay on their benefits, according to the latest annual report from Social Security’s board of trustees.

While 4 in 5 Social Security recipients are senior citizens, the remaining beneficiaries are people who qualify for disability payments or are the children and spouses of deceased workers, according to the Center on Budget and Policy Priorities.

Social Security’s solvency problem

Social Security’s funding issues have been years in the making, partially due to changing U.S. demographics. With baby boomers retiring in record numbers and seniors living longer, the program is increasingly strained by growing financial demands.

Because of that shift, Social Security is now paying out more in benefits than it receives in income, which is eating away at the $2.7 trillion in assets held in its trust funds — the reserves that pay out retirement and disability benefits.

By 2033, the trust fund paying Social Security benefits is on track to be depleted, at which point the Social Security Administration would be forced to cut recipients’ monthly benefits by 17%, according to the agency’s latest report.

Trump’s proposal to nix income taxes on benefits would wipe out $950 billion in funding for Social Security over the next decade, according to a Wednesday estimate from the Committee for a Responsible Federal Budget (CRFB), a nonpartisan advocacy group focused on fiscal policy.

That would have a twofold effect, pushing the program’s insolvency date forward a year to 2032 and forcing the Social Security Administration to cut benefits even more deeply than it now predicts, the group said. Recipients would face a 25% cut in their monthly checks in 2032, the CRFB estimated.

“Freeing them from taxation is a kind of benefit increase, but [the Social Security Administration] has to get the revenue from somewhere else or the benefits would just be cut,” Altman of Social Security Works told CBS MoneyWatch.

Are Social Security benefits taxable?

There is a misperception among some Americans that Social Security benefits aren’t taxable, perhaps reflecting that such income wasn’t taxable until 1984. But under changes signed into law by President Ronald Reagan, Social Security income above a certain threshold became taxable.

More seniors are subject to the tax each year because those thresholds haven’t been adjusted for inflation since 1984, which means each year more middle-income beneficiaries are paying taxes on their Social Security checks. For instance, the share of seniors who paid taxes on their benefits was 26% in 1998, according to the Congressional Budget Office. That figure now stands at 40%.

Individual tax filers with combined annual income (Social Security and other income, such as retirement distributions or dividends) ranging from $25,000 to $34,000 may have to pay income tax on up to half of their benefits. Individuals with earnings of more than $34,000 may pay taxes on up to 85% of their Social Security income.

Joint filers with incomes between $32,000 and $44,000 may have to pay income tax on up to 50% of their benefits, while married couples with incomes over $44,000 may be taxed on up to 85% of their benefits.

For instance, a single filer who collects the average annual Social Security benefit of $22,884, but whose total income is $50,000, would be taxed on 85% of their benefits, or $19,451. Only $3,433 of their Social Security income would be tax-free.

Trump’s tax promises

It’s not the first time Trump has made a promise on the campaign trail to lower taxes for specific groups of people. The former president pledged in June to end taxation on tips for service workers, a move that experts said would cost $250 billion over 10 years.

Many seniors might like the idea of eliminating taxes on their benefit checks, Altman noted. Many older Americans feel like they’re losing ground after years of high inflation, despite the annual cost-of-living adjustment that’s applied to Social Security checks, she said.

Trump’s Social Security proposal could be designed to appeal to seniors who were put off by a proposal from the Republican Study Committee, a group of conservatives in the House, to raise the retirement age to 70 for both Social Security and Medicare, Altman added. Currently, the full retirement age for Social Security is 67, while seniors can qualify for Medicare at 65.

“They were really targeting Social Security, and seniors took notice,” Altman said. Trump “is throwing things out to try to win voters.”

Is Trump testing new campaign strategies?

04:19

If Trump were elected, it’s unclear whether his proposals to eliminate taxes on tips or Social Security benefits would come to fruition. For one, lawmakers would need to pass legislation to change the tax code, which could be a hurdle if either the House or Senate were to be controlled by Democrats under a second Trump administration.

Meanwhile, Trump hasn’t yet released detailed plans for his tax proposals, unlike at this point in the 2016 race, according to Paul Ashworth, chief North America economist at Capital Economics.

“Although Trump occasionally talks about eliminating the taxes on tips or lowering the corporate tax rate a little more, these are throwaway lines in his stump speech rather than firm costed proposals,” Ashworth wrote in a report this week. “At this point in the 2016 election race, Trump had a (relatively) detailed plan to cut taxes by a massive $7 trillion over the following decade.”

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Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports.

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August 2, 2024
Harris repeats dubious claim on Trump, Social Security

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In the 2024 presidential campaign, Democrats have repeatedly targeted former President Donald Trump as a threat to Social Security.

Vice President Kamala Harris, just over a week into her status as the presumptive Democratic nominee, repeated the line during a July 30 rally in Atlanta.

“Donald Trump intends to cut Social Security and Medicare,” Harris said.

For this fact-check, we will focus on Trump’s plans for Social Security. We’ll cover Harris’ claim about Medicare in another fact-check.

During his yearslong tenure in the public eye, Trump has provided his critics with a rich vein of statements expressing openness to cutting Social Security. But the Harris campaign ignores most of what Trump has said during the 2024 campaign — namely, that he will not cut Social Security and Medicare.

We previously rated a similar claim by President Joe Biden — whom Harris succeeded as presumptive nominee — Mostly False. The evidence the Harris campaign provided to PolitiFact for this article was essentially the same as Biden’s campaign gave us for our earlier fact-check. It’s no more persuasive now.

What is Social Security’s fiscal challenge?

The key threat to the long-term viability of Social Security, the universal income-support program for older Americans, is a shortage of workers feeding their tax dollars into the system, plus a growing number of retirement-age Americans qualifying to receive benefits.

As the baby boom generation has increasingly shifted into retirement, fewer workers are paying into the system.

Unless changes are made, such as increasing the retirement age or paring benefit levels, the trust fund that supports Social Security is poised to run out in the 2030s. If nothing is done, significant cuts would take effect.

However, cutting Social Security has long been the “third rail of politics” — touch it and you die politically — so even making smaller cuts to avoid bigger ones down the road has been controversial.

That’s why both Biden and Trump pledged in their 2024 campaigns not to cut the program.

Trump’s past history of statements on Social Security

Prior to the 2024 campaign, Trump has flirted with support for Social Security cuts.

At least two occurred during the 2020 presidential campaign: a 2020 Fox News town hall that was clipped and shared June 12 by the Biden campaign and a 2020 interview with CNBC.

And before he became president, Trump periodically opined that Social Security needed to be cut or privatized, including in a 2012 interview with CNBC; a 2004 appearance on MSNBC, and a 2000 book, “The America We Deserve,” in which he called Social Security “a huge Ponzi scheme” and said he’d consider privatization.

“The solution to the Great Social Security Crisis couldn’t be more obvious: Allow every American to dedicate some portion of their payroll taxes to a personal Social Security account that they could own and invest in stocks and bonds,” he wrote. “We can also raise the age for receipt of full Social Security benefits to 70.”

Trump’s record in office

The Harris campaign also noted that as president, Trump submitted budget proposals that included cuts to Social Security. These were never implemented, due to opposition in Congress.

However, Harris (and Biden before her) glossed over what these cuts involved. The proposed cuts were focused on two parts of the program — Social Security Disability Insurance and Supplemental Security Income — not the more widely used old-age and survivor benefits.

SSDI benefits people with physical and mental conditions that are severe enough to permanently keep them from working. SSI payments are limited to low-income Americans — older adults, or adults or children who are disabled or blind.

While these cuts would have affected close to 10 million Americans, the pool of those who receive old-age and survivor benefits is almost seven times as large. The Harris campaign’’s decision to frame Trump’s record as cuts to “Social Security” may leave people assuming that Trump sought to cut old-age and survivor benefits, when he didn’t.

What Trump has said recently

Biden and Harris both cited a March 11 remark by Trump on CNBC that, with regard to entitlement programs such as Social Security, “there is a lot you can do in terms of entitlements, in terms of cutting.”

But this is the exception to the rule for Trump during this campaign cycle, and he immediately walked back his CNBC comments.

In an interview with the conservative outlet Breitbart News, Trump said he would “never do anything that will jeopardize or hurt” Social Security. He added, “We’ll have to do it elsewhere. But we’re not going to do anything to hurt them.”

The rest of Trump’s 2024 campaign rhetoric is more aligned with his comment to Breitbart — that he does not intend to cut Social Security — than the openness to cuts that he suggested to CNBC.

More than a year before the CNBC appearance, Trump posted a video to his campaign website in which he says not “a single penny” should be cut from Social Security. “DO NOT CUT the benefits our seniors worked for and paid for their entire lives,” Trump said. “Save Social Security. Don’t destroy it.”

Trump has repeatedly said he would not cut Social Security at campaign rallies in Michigan and Georgia and in multiple posts on his Truth Social platform.

Karoline Leavitt, the Trump campaign’s national press secretary, told PolitiFact in June that he “will continue to strongly protect Social Security and Medicare in his second term.”

Our ruling

Harris said, “Donald Trump intends to cut Social Security.”

Before the 2024 campaign, Trump said about a half dozen times that he’s open to major Social Security overhauls, including cuts and privatization. Most recently, in a March CNBC interview, Trump said of entitlement programs such as Social Security, “There’s a lot you can do in terms of entitlements, in terms of cutting.”

However, Trump quickly walked that statement back, and the CNBC comment stands at odds with essentially everything else Trump has said during the current presidential campaign. His campaign website says that not “a single penny” should be cut from Social Security, and he’s repeated similar lines in campaign rallies.

The statement contains an element of truth but ignores critical facts that would give it a different impression, so we rate it Mostly False.

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July 31, 2024
These 3 Social Security Changes Are Coming in January. Prepare Yourself Now.

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Although we’re not exactly nearing the end of 2024, we’ve passed the midpoint of the year. That means it may be time to start looking toward 2025 at all things financial.

Whether you’re retired or not, one financial program you’ll want to keep on your radar is Social Security. Each year, it tends to undergo changes that have the potential to impact seniors and working Americans alike. With that in mind, here are three almost-guaranteed changes to gear up for in 2025.

Image source: Getty Images.

1. Benefits will increase — but next year’s COLA will likely be lower than 2024’s

Social Security benefits are eligible for an annual cost-of-living adjustment, or COLA. The whole point of COLAs is to help seniors maintain their buying power as things get more expensive due to inflation.

At the start of 2024, Social Security benefits rose 3.2%. The year prior, benefits went up 8.7% in response to the rampant inflation consumers had to deal with in 2022.

But next year’s Social Security COLA isn’t shaping up to be quite as generous as this year’s. The most recent 2025 COLA estimate puts next year’s raise at 2.63%. That’s certainly not the smallest Social Security on record, but it’s a lower raise than recent ones.

Social Security COLAs are calculated based on third-quarter inflation data. Since we’re not even through July, it’s too soon to have a precise number for 2025’s Social Security raise.

However, if you’re a current Social Security recipient, that 2.63% projection should give you an idea of what to prepare for. And if you’re not super happy with that number, you can take steps now to make up for it, such as cutting some expenses or turning to the gig economy for extra income.

2. Higher earners will lose more of their income to Social Security taxes

Social Security’s primary source of revenue is payroll taxes. But higher earners don’t necessarily pay into the program on all of their earnings. Rather, a wage cap is set each year that dictates how much income is subject to Social Security taxes.

This year, the wage cap is $168,600. This means that someone earning $200,000 a year won’t pay Social Security taxes on their last $31,400 of income.

But the Social Security wage cap tends to rise from year to year in accordance with inflation and wage growth. Come 2025, higher earners should expect to fork over even more Social Security taxes — it’s just a matter of how much.

If you’ll likely to be impacted by an increase in the Social Security wage cap, sit down with an accountant now to work out some tax strategies. Those could include maxing out retirement-plan contributions or taking investment losses strategically to offset ordinary income.

3. Social Security will become harder to qualify for

Seniors don’t automatically qualify for Social Security simply by reaching a certain age. To be eligible for benefits in retirement, you’ll need to accumulate 40 work credits in your lifetime, at a maximum of four credits per year.

In 2024, a single work credit is worth $1,730 of earnings. But that threshold is likely to increase in 2025. If you work very part-time but want to qualify for Social Security, you may need to look at increasing your hours to ensure that you’re getting the number of work credits you want.

The good news here, though, is that full-time workers generally won’t be impacted by an increase in the value of a Social Security work credit. Even if that number rises substantially, a full-time minimum-wage salary should be more than enough to secure four work credits in 2025.

These are only some of the Social Security changes that are likely to take place in 2025. Whether you’re retired or not, it pays to keep tabs on the program and see what’s in store. And if you expect any of these changes to affect you, now’s the time to take steps to protect yourself financially, whether by working out a tax strategy or taking steps to conserve cash.

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These 3 Social Security Changes Are Coming in January. Prepare Yourself Now. was originally published by The Motley Fool

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July 26, 2024
Social Security recipients must update their online accounts. Here’s what to know.

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If you recently got an email from the Social Security Administration, don’t ignore it. Millions of people who created an online my Social Security account before September 18, 2021, will soon have to switch to a Login.gov account to be able to continue to access their information, according to the agency.

All users will soon need to have either a Login.gov or ID.me account to access their Social Security account and other online services, SSA said. More than 5 million account holders have already made the transition, part of an effort to simplify the process of signing in securely to access online services.

As of June, roughly 46 million out of the 86 million people with a my Social Security account will need to shift to a Login.gov account to continue access to their online services, SSA said.

“We have not set a final deadline for legacy accounts to transition to Login.gov accounts,” an agency spokesperson said.

The Social Security Administration hopes the new approach will help address lengthy wait times for callers to its 800 number, which in April averaged about 24 minutes, down from 42 minutes in November, according to the agency.

The “my Social Security” accounts are free and offer personalized tools regardless of whether they are receiving benefits. The service lets users apply for and manage benefits, as well as enable them to estimate future benefits and request replacement Social Security cards.

When Social Security mistakenly overpays benefits, you might get a bill | 60 Minutes

13:35

Social Security Commissioner Martin O’Malley touted the upgrade as “a safe and secure way for people to do business with” his agency. “We’re excited to transition to Login.gov to access our online services, streamlining the process and ease of use for the public across agencies.”

The agency encouraged my Social Security account holders to sign in, at which point they’ll be given an option to transition to Login.gov. Once their account is linked, a confirmation screen will appear, and they can access to their personal Social Security services or other tools.

Existing Login.gov or ID.me account holders do not need to create a new account or take any other action, according to the agency.

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Kate Gibson is a reporter for CBS MoneyWatch in New York, where she covers business and consumer finance.

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July 18, 2024
Project 2025: Fact-checking Biden campaign claims

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By now, you have probably heard about Project 2025. President Joe Biden certainly hopes so.

Biden’s reelection campaign is blitzing the internet with social media posts, videos, ads and a website that warn of a stark postelection agenda a victorious Donald Trump could execute.

“Project 2025 should scare every single American,” Biden posted on X July 11. “It would give Trump limitless power over our daily lives.”

A new Biden ad puts it this way: “Here’s the truth: It’s a dangerous takeover by Trump and his allies to pass his extreme MAGA agenda.”

The effort is not “Trump’s Project 2025,” as Biden’s campaign calls it, though some of the ideas build on Trump’s 2024 plans.

The Heritage Foundation, a conservative think tank, is leading Project 2025, a presidential transition project with contributions from over 100 conservative organizations. The 900-page manual, published in 2023, includes detailed policies to apply after a Republican victory in November.

Trump has distanced himself from Project 2025, writing on Truth Social that he “knows nothing” about the project and has “no idea” who is in charge of it. (CNN identified at least 140 former advisers from the Trump administration who have been involved.)

Much of the plan calls for extensive executive-branch overhauls and draws on both longstanding conservative principles, such as tax cuts, and more recent culture war issues. Project 2025 lays out recommendations for disbanding the Commerce and Education departments, eliminating certain climate protections and consolidating more power to the president.

Project 2025 offers a sweeping vision for a Republican-led executive branch. But the Biden campaign has sometimes gone too far in describing what the recommendations call for and how closely they align with Trump’s policies.

PolitiFact researched Biden’s warnings about how the plan would affect reproductive rights, federal entitlement programs, education, presidential power and immigration. Here’s what the project does and doesn’t call for, and how it squares with Trump’s positions.

Project 2025 wouldn’t ban abortion outright, but would curtail access

Bottles of abortion pills mifepristone, left, and misoprostol, right, are shown in Septmber 2010 at a clinic in Des Moines, Iowa. (AP)

Biden’s campaign says Project 2025 would “ban abortion nationwide.” That isn’t in the plan, though it makes several recommendations that could greatly limit how abortions are performed in the U.S. However, what’s known about Trump’s agenda does not match Project 2025.

Project 2025 says the Food and Drug Administration should reverse its 2000 approval of the abortion pill mifepristone, the first pill taken in a two-drug regimen for a medication abortion. Medication is the most common form of abortion in the U.S. — accounting for around 63% in 2023.

If mifepristone were to remain approved, Project 2025 recommends new rules, such as cutting its use from 10 weeks into pregnancy down to seven weeks. It would have to be provided to patients in person — part of the group’s efforts to limit access to the drug by mail. The Supreme Court rejected a legal challenge to mifepristone’s FDA approval over procedural grounds.

The manual also calls for the Justice Department to enforce the 1873 Comstock Act on mifepristone, which bans the mailing of “obscene” materials. Abortion access supporters fear that a strict interpretation of the law could go further to ban mailing the materials used in procedural abortions, such as surgical instruments and equipment.

The plan proposes withholding federal money from states that don’t report to the CDC how many abortions take place within their borders and would prohibit abortion providers, such as Planned Parenthood, from receiving Medicaid funds. It also calls for the Department of Health and Human Services to ensure that the training of medical professionals, including doctors and nurses, omits abortion training.

The document says some forms of emergency contraception — particularly Ella, a pill that can be taken within five days of unprotected sex to prevent pregnancy — should be excluded from no-cost coverage. The Affordable Care Act requires most private health insurers to cover recommended preventive services, which involves a range of birth control methods, including emergency contraception.

Trump recently said states should decide abortion regulations and that he wouldn’t block access to contraceptives. He said during the June 27 debate that he wouldn’t ban mifepristone after the Supreme Court “approved” it. But the court rejected the lawsuit based on standing, not the case’s merits.

Project 2025 does not call for cutting Social Security or raising the retirement age

The Biden campaign’s Project 2025 website says, “Trump’s Project 2025 and congressional allies called for raising the retirement age, which would significantly cut Social Security benefits.”

This is misleading. The Project 2025 document mentions Social Security 10 times, but none of those references addresses plans for cutting the program or raising the retirement age.

To support this statement, the campaign pointed to a June 18 X post by the Heritage Foundation that said the Social Security retirement age “should be raised.”

However, the group sharing a story that calls for raising the retirement age is not the same thing as it being in Project 2025 or having Trump say it. Trump has been largely consistent during the 2024 campaign about not cutting Social Security benefits or raising the retirement age.

Project 2025 eliminates the Education Department, which Trump supports

The Biden campaign said Project 2025 would “eliminate the Department of Education” — and that’s accurate. Project 2025 says federal education policy “should be limited and, ultimately, the federal Department of Education should be eliminated.” The plan scales back the federal government’s role in education policy and devolves the functions that remain to other agencies.

Aside from eliminating the department, the project also proposes scrapping the Biden administration’s Title IX revision, which prohibits discrimination based on sexual orientation and gender identity. It also would let states opt out of federal education programs and calls for passing a federal parents’ bill of rights similar to ones passed in some Republican-led state legislatures.

Students work on essays in their fifth grade class at Lewton Elementary School in Lansing, Mich. (AP)

Republicans, including Trump, have pledged to close the department, which gained its status in 1979 within Democratic President Jimmy Carter’s presidential Cabinet.

In one of his Agenda 47 policy videos, Trump promised to close the department and “to send all education work and needs back to the states.” Eliminating the department would have to go through Congress, so Trump couldn’t do it on his own.

Project 2025 would reclassify nonpolitical federal workers, making them easier to fire

The Biden campaign said July 8 on X that Project 2025 would “purge the government of thousands of civil servants and replace them with unqualified, far-right MAGA loyalists.”

Experts say this is central to Project 2025 — and Trump’s plan — because it would be an effort to install not only political appointees, as happens whenever a new president enters office, but also senior tiers of career, nonpolitical officials.

Of the nearly 2 million federal employees, the vast majority are nonpolitical career officials who execute their duties regardless of the administration. Currently, these employees cannot be fired for political reasons.

Project 2025 says these workers “lean heavily to the Left” and supports reinstating Executive Order 13957, which Trump issued shortly before leaving office before Biden overturned it.

More commonly known as Schedule F, the order would reclassify certain federal employees, stripping them from protections from being fired or experiencing political influence. Project 2025 says this would include employees who “discharge significant duties and exercise significant discretion in formulating and implementing executive branch policy and programs.”

“Under Project 2025, the government could reclassify any attorney supervisory position as Schedule F, fire the career employee, and replace that employee with their own candidate,” said Anne Marie Lofaso, a West Virginia University law professor.

Trump has promised to do this, saying that he would reissue his 2020 executive order that enacted Schedule F “on Day One.”

Project 2025 recommends expanding presidential powers

The Biden campaign says the project would order the “prosecution of political opponents.”

Project 2025 recommends the “unitary executive theory,” which would centralize more power in the Oval Office. The authors point to Article 2 of the Constitution, saying it gives the president complete control over the executive branch.

Applying this theory would let the president more directly control the Justice Department and the FBI. But the document doesn’t discuss prosecuting opponents.

The Biden campaign has shared videos of conservative figures, such as political strategist Steve Bannon and political commentator Tim Pool, discussing how a future Trump administration should and would jail Democrats and other opponents. But neither are involved with Project 2025.

Trump has said he would be open to prosecuting Biden administration officials and others, partly because of investigations into Trump that led to criminal indictments. “Look, when this election is over, based on what they’ve done, I would have every right to go after them, and it would be easy because it’s Joe Biden,” he told Fox News’ Sean Hannity on June 5.

Project 2025 would expand migrant detention capacity, including tents, but the plan does not use ‘mass detention camps’

Project 2025 plans to “round up millions of Latinos in mass detention camps,” the Biden-Harris campaign account tweeted June 9.

A U.S. Border Patrol agent watches June 17, 2018, as migrants who’ve been taken into custody stand in line at a facility in McAllen, Texas. (U.S. Customs and Border Protection’s Rio Grande Valley Sector via AP)

Project 2025’s manual doesn’t explicitly call for “mass detention camps,” and the group called the claim “misleading.” But it does call for a sizable increase in immigration detention capacity and would strengthen the government’s authority to build temporary tent facilities.

Under Project 2025, detention capacity would more than double to 100,000 daily beds.

Detention space in the U.S. has remained fairly consistent for years. There were more than 37,000 migrants in detention as of June 30, according to Syracuse University’s Transactional Records Access Clearinghouse. Because of limited detention space, nearly 180,000 people are enrolled in detention alternatives that use GPS tracking, ankle monitors or smartphone apps to track people’s locations. Project 2025 would end the government’s detention alternatives program.

The plan would redirect money sent to nonprofit organizations that support immigrants with travel within the U.S. back to the Department of Homeland Security, partly for additional detention space.

Project 2025 authors would seek changes to immigration laws and court settlements, partly to legalize the detention of families and unaccompanied minors.

Immigration law generally requires that people who enter the U.S. illegally be detained as they await court proceedings. However, it also gives Homeland Security officials broad discretion on how to best use detention resources. Project 2025 wants to make detention mandatory.

Families traveling with minors and minors traveling alone generally cannot be detained under the 1997 Flores settlement — a court agreement that established national standards for the detention, release and treatment of migrant children. Project 2025 says Congress should set the terms and standards that allow for the use of “large-scale use of temporary facilities (for example, tents).”

In 2019, a federal judge blocked Trump’s effort to overturn the Flores settlement to allow for the indefinite detention of families traveling with children.

Trump on multiple occasions has said he would “carry out the largest domestic deportation operation in American history.”

Stephen Miller, Trump’s former senior adviser, told The New York Times in 2023 that Trump would build large camps in Texas to detain migrants. Trump has not made that promise, but told Time magazine in April that it wasn’t out of the question.

PolitiFact Staff Writers Mia Penner and Ranjan Jindal contributed to this report.

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July 12, 2024
Social Security recipients could see the smallest COLA increase since 2021. Here’s what to expect.

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Each year, the Social Security Administration adjusts its benefits to account for inflation, providing an annual cost-of-living increase that’s meant to offset rising prices. This year, the program’s 67 million recipients may see their smallest boost since 2021.

The 2025 cost-of-living adjustment is projected to come in around 2.63%, the Senior Citizens League, an advocacy group for older Americans, said on Thursday. That figure is based on recent inflation data, with consumer prices in June rising 3%, the smallest increase since June 2023 and less than the 3.1% economists were forecasting.

If enacted, a 2.63% increase would represent a monthly payment increase of about $50, based on the current average monthly benefit of $1,907.

To be sure, official word on this year’s cost-of-living adjustment, or COLA, won’t come until October, when the Social Security Administration traditionally sets the next year’s benefit hike for beneficiaries. The first payment with the new COLA will show up in most recipients’ January benefit check.

While U.S. inflation is easing, many seniors aren’t feeling relief, the Senior Citizens League noted. Poverty among senior citizens has been on the rise in recent years, and almost half of people over 65 years old said they were having difficulty in paying their household bills, according to the most recent Census Household Pulse, which surveyed people from May 28 to June 24.

“Rising grocery prices is creating food insecurity for many retirees,” the Senior Citizens League said in its statement. “Feeding America estimated that 5.5 million Americans age 60 and above suffered from food insecurity in 2021, in the most recent study available on the subject, and that number is likely higher today.”

How Social Security sets its COLA

The Social Security Administration sets its annual COLA based on inflation during the third quarter, or from July through September. The agency takes the average inflation rate over that period from what’s known as the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, which tracks spending by working Americans.

If that inflation rate is higher than the same period a year earlier, the COLA is adjusted upwards by the difference.

But some advocacy groups and lawmakers have criticized the use of the CPI-W, given that older Americans spend differently than younger workers. For instance, the Senior Citizens League has noted that the CPI-W assumes workers spend about 7% of their income on health care, but older Americans can spend up to 16% or more on health costs.

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Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports.

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July 11, 2024
The 2024 GOP Platform Promises To ‘Make America Affordable Again.’ So Why Are They Embracing Fiscal Insanity?

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The Republican National Committee just released its 2024 platform. While calling it a platform is a stretch, the list of bullet points gives an idea of what the potential next Trump administration’s goals are. Here’s one issue that should be front and center: End inflation and make America affordable again.

To be sure, “make America more affordable” would be a great slogan and a great objective. It’s similar to what many have called an “abundance agenda.” While there is plenty to dislike in a platform that at times feels unserious and destructive, this part I like.

Abundance isn’t achieved by the same old subsidies or tax breaks for special interests, price controls, or spending loads of taxpayer money on transfer payments. It’s achieved by freeing up the supply side of our economy. That means freeing producers and innovators from excessive regulatory obstacles and heavy tax burdens (including tariffs) so they can provide more of what Americans need.

The Trump administration platform assures us it will move in this direction. For instance, it wants to increase America’s dominance as an energy producer, which will only be achieved through a deregulation agenda. Apart from counterproductive tax incentives for first-time homeowners, it expresses a commitment to lowering housing costs through deregulation.

The platform states it will “cancel the electric vehicle mandate and cut costly and burdensome regulations” as well as “end the Socialist Green New Deal.” I assume that means ending the expensive subsidies and tax breaks in the Inflation Reduction Act. Great idea, but get ready to hear all the recipients of these handouts cry that they won’t be able to do what they were already doing before being given the subsidies.

A deregulation agenda would serve the Republicans’ goal of boosting manufacturing much better than tariffs, which former President Donald Trump continues to love despite overwhelming evidence that they don’t do what he claims. Most tariffs raise the prices of inputs used by American firms, including manufacturing, to produce outputs that serve their customers.

Something similar could be said about Republicans’ swipes at immigrants. Fewer immigrants will create labor supply shortages, hurt manufacturing, and slow the economy.

Still, even with their disastrous trade and immigration agenda and the many contradictory goals espoused by this platform, implementing the deregulatory part of the agenda will make some strides at freeing the supply side and hence lowering prices. Indeed, President Joe Biden has not only maintained many of Trump’s tariffs, but he’s added some of its own. He’s also systematically favored subsidizing the demand for certain things—nudging customers to buy what he wants them to buy—while taking actions that restrict supply. That’s a recipe for affordability failure.

But as far as affordability goes, I’m less optimistic about the prospect of the next administration ending inflation. That’s because Trump and other Republicans are firmly embracing fiscal irresponsibility and excessive debt. The platform contains no mention of a plan to get government debt under control. Instead, it pledges to “fight for and protect Social Security and Medicare with no cuts, including no changes to the retirement age.”

Many voters love hearing this promise. But maintaining these two objectively underfinanced programs will inevitably explode the debt burden over the next 30 years. In the entire history of the United States so far, Uncle Sam has accumulated roughly $34 trillion in debt. Under the Trump plan, the government would need to borrow another $124 trillion for these programs alone.

Leaving aside the question of who will lend us all this money when foreign buyers are already scaling back purchases of U.S. Treasuries, remember that most of the inflation we’ve recently suffered is the product of massive Biden administration spending on top of the COVID-19 spending without any plan to pay for it. As such, announcing that the U.S. will simply go on another borrowing spree sends a poor signal, and it might even increase inflation.

This is made more important because Trump wants to make permanent the tax cuts that are set to expire after 2025, end taxes on tips, and more. If Congress and the president do this without any offsetting spending reductions, it will add at least another $4 trillion in debt over 10 years. With more inflationary fuel, we could easily see the Federal Reserve raise interest rates again, making borrowing money even more expensive than it already is.

The bottom line is that Trump’s deregulatory agenda could have a shot at lowering some prices. But it will only be a game-changer if he becomes serious about fiscal responsibility. Right now, he isn’t, so I wouldn’t count on it.

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July 10, 2024
6/23/2024: The Capital of Free Russia; Our Mistake is Your Responsibility; Law of the Sea

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6/23/2024: The Capital of Free Russia; Our Mistake is Your Responsibility; Law of the Sea – CBS News

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First, Putin’s courageous Russian critics speak out. Then, a look at what happens when Social Security mistakenly overpays. And, U.S. fails to ratify treaty for ocean mining.

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June 24, 2024
Faced With Potential Changes, Dallasites Rally To Save Social Security

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Kenneth Williams, 69, has been retired for eight years now, and he calls it the best time of his life. That’s why he and several others gathered outside a Social Security office in Dallas on Saturday…

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Jacob Vaughn

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June 24, 2024
When Social Security mistakenly overpays benefits, you might get a bill | 60 Minutes

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When Social Security mistakenly overpays benefits, you might get a bill | 60 Minutes – CBS News

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Each year, about a million people are told they owe the Social Security Administration money because the agency miscalculated their benefits and paid them too much.

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June 23, 2024
Does My Retirement Income Count as Income for Social Security?
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Man looking at taxes from his social security

Deciding when to take Social Security benefits is one of the most important questions to answer in planning your retirement strategy. Second to that is understanding what might increase—or reduce—your benefit amount. Does retirement income count as income for Social Security? No, but working while claiming benefits could shrink the amount that you’re able to collect. Talking to a financial advisor can help you to maximize Social Security benefits in retirement.

Understanding Social Security Benefits

Social Security retirement benefits are designed to provide a supplement source of income to eligible seniors. You can begin taking Social Security retirement benefits as early as 62, though doing so can reduce the amount you receive. Waiting until age 70 to begin taking benefits, meanwhile, can increase your benefit amount.

Benefits are calculated based on your earnings history. Specifically, Social Security considers earned income, wages and net income from self-employment. If any money is withheld from your wages for Social Security or FICA taxes, then your wages are covered by Social Security since you’re paying into the system.

When you apply for benefits, Social Security uses your average indexed monthly earnings to decide how much you qualify for. This average is based on up to 35 years of your indexed earnings and it’s used to calculate your primary insurance amount (PIA). The PIA determines the benefits that are paid out to you once you retire.

Does Retirement Income Count as Income for Social Security?

Retirement income does not count as income for Social Security and won’t affect your benefit amount. Specifically, the Social Security Administration excludes the following from income:

None of these are considered earnings for Social Security purposes. Again, Social Security only looks at money that you actually earn from working a job or being self-employed. That means that you could collect Social Security benefits while also taking withdrawals from a 401(k) or individual retirement account (IRA) or receiving payments from an annuity. Reverse mortgages won’t affect your Social Security benefits or eligibility for Medicare either.

With a reverse mortgage, you tap into your home equity but instead of making payments to a lender, the lender makes payments to you. You don’t have to pay anything back towards the reverse mortgage as long as you’re living in the home. Many retirees choose to supplement Social Security benefits with a reverse mortgage.

Does Working in Retirement Reduce Social Security Benefits?

Financial advisor explaining someone’s retirement social security tax obligation

Working while you’re also drawing Social Security benefits could reduce your monthly payments, depending on your age and earnings.

Under Social Security rules, you’re considered to be retired once you begin receiving benefits. If you’re below full retirement age but still working, Social Security can deduct $1 from your benefit payments for every $2 you earn above the annual limit. For 2023, the limit is $21,240.

In the year you reach your full retirement age (FRA), the deduction changes to $1 for every $3 earned above a different annual limit. For 2023, the limit is $56,520. Once you reach your full retirement age, your benefits are no longer reduced regardless of how much you earn. Social Security will also recalculate your benefit amount so that you get credit for any months that your benefits were reduced because of your earnings.

Coordinating Retirement Withdrawals and Social Security

Deciding when to take Social Security benefits starts with considering your other sources of retirement income. For example, that might include:

You could also add a health savings account (HSA) here, though it’s technically not a retirement account. An HSA lets you save money on a tax-advantaged basis for healthcare expenses but once you turn 65, you can withdraw money from it for any reason without a tax penalty. You would, however, pay ordinary income tax on the distribution.

From a tax perspective, it usually makes sense to start with taxable accounts first, then tax-advantaged accounts for withdrawals, leaving Roth and Roth-designated accounts last. In doing so, you allow your Roth investments to continue growing tax-free until you need them.

In terms of when to take Social Security benefits, delaying usually makes sense if you’re hoping to get a larger payout or you have other sources of income to rely on. You might also consider putting off taking benefits if you plan to continue working up until your full retirement age, as that could allow you to claim a larger benefit amount.

A financial advisor can help you build an efficient plan for coordinating your retirement income. Get matched with a fiduciary financial advisor.

Creating Multiple Streams of Income for Retirement Without Affecting Social Security

Since retirement income doesn’t count as income for Social Security, it could be to your advantage to have more than one source that you can rely on. You might already be contributing to your 401(k) at work but you could add an IRA into the mix for additional savings.

Whether it makes sense to choose a traditional or Roth IRA can depend on where you expect to be tax-wise once you retire. You might choose a traditional IRA if you expect to be in a lower tax bracket down the line but could benefit from claiming deductible contributions now. On the other hand, a Roth IRA might be preferable if you’d like to be able to withdraw money tax-free in retirement.

An annuity is another option if you’d like to invest money now to generate guaranteed income later. When considering an annuity, it’s important to learn how different types of annuities work and what they can cost.

Real estate might be another possibility if you’re looking for a passive income option that won’t affect your Social Security benefits. You could purchase a rental property or become a flipper, but owning property directly isn’t a requirement. You can also create passive investment income through real estate investment trusts (REITs), real estate crowdfunding platforms or real estate mutual funds.

Talking to a financial advisor can give you a better idea of how to create multiple streams of income for retirement, without affecting your Social Security benefits. An advisor should also be able to help you formulate a strategy for getting the most benefits possible for yourself and your spouse if you’re married.

Bottom Line

Man confused with his social security

Retirement income won’t affect your Social Security benefits, but income earned from working could. If you plan to draw Social Security while working, it’s helpful to know what that might mean for your benefits payout. Getting an early start with saving and investing for retirement could allow you to delay taking Social Security so that you’re able to claim a larger benefit.

Retirement Planning Tips
- Working with a financial advisor can help you to fine-tune your retirement plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Social Security benefits are taxable for retirees who have substantial income from wages, self-employment, interest and dividends. If you’re working while claiming benefits or earning interest and dividend income, you may have to pay taxes on some of your benefits, depending on how much income you have.
- Check out our free retirement calculator for a quick estimate on what you can expect based on your age, expected retirement and sources of income.
- Keep an emergency fund on hand in case you run into unexpected expenses. An emergency fund should be liquid — in an account that isn’t at risk of significant fluctuation like the stock market. The tradeoff is that the value of liquid cash can be eroded by inflation. But a high-interest account allows you to earn compound interest. Compare savings accounts from these banks.
Photo credit: ©iStock.com/SrdjanPav, ©iStock.com/AJ_Watt, ©iStock.com/RollingCamera

The post Does Retirement Income Count as Income for Social Security? appeared first on SmartReads by SmartAsset.
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June 20, 2024
Social Security Administration raises alarm over $600 payment increase scam
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(NewsNation) — Unreliable websites claiming Social Security recipients will receive a $600 payment increase or get a new stimulus check this month are spreading misinformation, according to the agency.

“Reports of a $600 payment increase are FALSE, please be aware and don’t fall for this stunt,” Social Security Commissioner Martin O’Malley said in a news release.

The agency didn’t specify how the rumor started, but NewsNation reviewed multiple fake news articles making the claim. One described the bogus payment as the “long-awaited $600 increase.”

Why some Social Security recipients may not receive a payment in June

The false rumor gained so much traction that the Social Security Administration’s phone lines were slammed with more than 463,000 calls in a single day, O’Malley said.

NewsNation identified other online articles falsely claiming Social Security recipients are set to receive new stimulus checks. That’s also untrue, a spokesperson for the Social Security Administration confirmed via email.

Social Security-related scams are the number one government imposter scam in the United States and last year consumers reported losing more than $126.5 million to them, according to the Federal Trade Commission (FTC).

Official announcements about changes to payments can be found on the government website. Individuals are also notified directly.

When will the 2025 COLA increase be announced?

The annual cost-of-living-adjustment (COLA) for 2025 will be announced in October. Any changes will then appear in your check starting in January 2025.

The latest estimate from The Senior Citizens League projects Social Security’s COLA will be 2.57% in 2025 but that isn’t set in stone. The final amount is calculated based on the average inflation rate from July to September, which is then compared to the same period the year before.

Medicare, Social Security concerns rising among US adults: Poll

“The annual cost-of-living increases issued by SSA are ALWAYS automatic. No additional information is required for you to receive the legitimate COLA increase,” Gail Ennis, the Social Security Administration’s Inspector General, said in a statement.

When will I get my Social Security check in June?

Some Social Security recipients saw a slight change in June. Typically, Supplemental Security Income (SSI) payments go out on the first of each month but because June 1 fell on a Saturday, those payments were sent on Friday, May 31. That doesn’t mean SSI recipients got an extra payment, instead, they just received it a day early.

For others, here’s when you can expect your Social Security check, according to the agency’s schedule:
- June 3: Payments for those who have received Social Security since before May 1997.
- June 12: Payments for people whose birthday falls between the first and 10th of any given month.
- June 18: Payments for people whose birthday falls between the 11th and 20th of any given month.
  
  This is a day earlier than usual because Juneteenth is a federal holiday
- June 26: Payments for people whose birthday falls between the 21st and 31st of any given month.
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Andrew Dorn

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June 18, 2024
Oregon town among top 20 in highest retirement income in US
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by: Katie Smith, Jeremy Tanner

Posted: May 31, 2024 / 05:08 PM PDT

Updated: May 31, 2024 / 05:08 PM PDT
(NewsNation) — Retirees in Ann Arbor, Michigan, collect the most in Social Security income nationwide, according to a May report.

The mean amount of Social Security income for retirees in Ann Arbor, Michigan, is $30,428, a SmartAsset analysis found.

The retirement benefit amount is tied to how much one paid in Social Security taxes over the course of a career, with higher income equaling a bigger benefit, according to the AARP. There is a limit to the size of the monthly check, however, with payments maxing out at $3,822.

The top 10 cities with the highest retiree Social Security income are:
1. Ann Arbor, Michigan — $30,428
2. Carmel, Indiana —$30,069
3. Goodyear, Arizona — $29,157
4. Cambridge, Massachusetts —$28,219
5. Allen, Texas — $27,735
6. Sugar Land, Texas — $27,725
7. The Woodlands, Texas — $27,661
8. Highlands Ranch, Colorado — $27,443
9. Olathe, Kansas — $27,151
10. Fishers, Indiana — $27,133
Renters staying put for longer as home prices, rent soar: Report

Of the 345 cities researchers analyzed, Fishers, Indiana, sits at the bottom of the top 10 highest Social Security income recipients at $27,133.

Social Security makes up just a portion of the income retirees take home, however.

Once mean retirement account incomes are accounted for, Ann Arbor ranks 12th, while Arlington, Virginia, sits atop the list at a cumulative $90,140.

Those totals include income from pensions, 401(k)s, IRAs and other accounts.
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Katie Smith

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May 31, 2024