Looking ahead to 2025, the cost-of-living adjustment for Social Security is expected to be smaller than it was for 2024, given the easing of inflation. Americans should also be aware of changes to the full retirement age and Social Security credits and taxes.
Retirement planning success hinges on a combination of "income, protection, tax implications and legacy planning," writes Jeremy Nason of Insurance Pro Shop. Among Nason's recommendations are minimizing tax liabilities through Roth conversions and investment location optimization, and using trusts and life insurance for efficient wealth transfers.
Americans report that they are more likely to regret failing to build up their retirement savings or emergency funds than taking on debt, according to a Bankrate report. In addition, 4 in 10 people say they have made no progress in addressing their financial regrets during the past 12 months.
An AARP report estimates that about 1.4 million Medicare beneficiaries will save more than $1,000 annually in prescription drug costs under a provision in the Inflation Reduction Act, which will cap Medicare Part D spending to $2,000 annually starting next year. The cap will benefit more than 3.2 million seniors, or about 8.4% of Part D beneficiaries, in 2025 and about 4.1 million people, or about 9.6% of beneficiaries, by 2029.
A report by The Pew Charitable Trusts highlights the best practices of leading state retirement systems that balance workforce goals and fiscal sustainability. The report emphasizes the importance of replacement income ratios, savings rates and risk-sharing features in creating robust retirement plans. Successful states such as Arizona, South Dakota and Wisconsin demonstrate how transparent policies and effective risk management can lead to long-term stability and security for public employees.
Reports from Wilshire Advisors, LGIMA and Aon show that US corporate pension funding ratios stayed above 100% in August. "August's funded status improved due to the continued increase in asset values, with most asset classes posting positive monthly returns despite an early month drawdown in global equity," said Wilshire's Ned McGuire.
It may be possible to update and modernize an irrevocable trust, writes attorney Anna Soliman, who notes the need to carefully review trust terms, analyze state-level laws and consider potential remedies such as decanting. "It's important to think through the tax consequences you may be seeking with a change, as well as tax consequences you may not be focused on," Soliman writes.
Financial advisors stress the importance of health savings accounts and discuss their benefits, including triple tax savings, the ability to invest the money, and being able to save for future health expenses. "This is one of the best tax-advantaged accounts that is out there," said Aaron Clarke, a wealth advisor at Heritage Financial.
Financial professionals discuss some summer-related tax savings that you may want to take advantage of. They include tax credits for child and dependent care, tax breaks for the employment of children in family businesses, and tax deductions for renting out a home for vacation purposes.
Millennials have closed early wealth gaps, in large part thanks to rising home values during the COVID-19 pandemic, according to a study by the Center for Retirement Research at Boston College. Despite starting their careers in weak labor markets and facing higher Social Security retirement ages, their wealth-to-income ratio now surpasses that of Generation X and baby boomers at similar ages. However, the stability of this wealth, given potential housing market reversals and typical retirement spending habits, remains uncertain for their retirement readiness.
Research shows that pensions play an essential role in strengthening the public safety workforce, but public safety retirement systems often face unique challenges. On Sept. 19, NCPERS will host a webinar to explore why Deferred Retirement Options Programs (DROPs) are so popular with public safety members, especially in the post-COVID environment. Learn more and register now.
Infrastructure investing is changing. For decades, the asset class has been characterized by assets that provide essential services that are highly regulated, including toll roads, utilities and ports. However, over the past 10 years, the opportunity set has evolved into a new version of infrastructure. Learn more.
The National Conference on Public Employee Retirement Systems (NCPERS) is the largest trade association for public pensions, representing approximately 500 plans, plan sponsors, and other stakeholders throughout the United States and Canada. Organized as a 501(c)(3) non-profit, we are a unique network of trustees, administrators, public officials, and investment professionals who collectively oversee approximately $4 trillion in retirement funds managed on behalf of seven million retirees and nearly 15 million active public servants — including firefighters, law enforcement officers, teachers, and other public servants.
Founded in 1941, NCPERS is the principal trade association working to promote and protect pensions by focusing on Advocacy, Research and Education for the benefit of public sector pension stakeholders… It’s who we ARE!