Retiring Well, August 31, 2024: What Will the Social Security COLA Be for 2025?

thanks for tuning in to retiring well going to be diving right into Social Security and the potential cost of living adjustment for 2025 what about with health insurance the you got Cobra Marketplace Insurance what's the appropriate answer and then making your money behave that sounds a little little odd but uh you want to be paying attention to that and then lastly savings for retirement with very little money how do you accomplish that and have a successful retirement so all this and much more coming up right here right now on retiring well retiring well brought to you by Centennial wealth advisory financial advisors specializing in retirement planning and serving all of Northern Michigan retiring well helping you plan for a successful and comfortable retirement retiring well plan to retire well let's start off here with the show this week talking about maybe one of the most talked about topics that's out there Social Security and let's dive in little a little bit further with Social Security and talk about Cola and maybe what does that look like for this upcoming year of 2025 what are some projections that are out there now first let's back up and understand what is Cola what does that mean c l a so that stands for cost of living adjustment so this was enacted by legis legislation in 1973 was designed by the government to help Social Security keep up with the cost of living now it's not always an exact science and sometimes it may feel like inflation is rising faster than what your Cola would be as if you're collecting it but they're using different methods to calculate this prior to this legislation in 1973 it was something that just was enacted and decided upon by legislation under the Congress there was not actually a factor that did that so things have changed since then since 1975 when this all took effect these adjustments actually hit in June from 75 to 1982 since then they actually are effective December and you'll see them on your January payments so we look back over the history of cola since 1975 you'll see on this chart here there's Varan things that have been out there some years have actually been zero where they've given us no increase to our social security cost living adjustments in some years back in the late 70s early 80s when inflation was very very high many of you may remember those years where mortgage rates were you know 15 16 177% stuff like that you had some double digit Cola increases in there last year for our 2024 Social Security so remember so that started or it was kind of effective December of 23 that was at 3.2% so this year the Senior League and there are a nonpartisan uh group out there that studies this sort of stuff and kind of multiple times a year will release projections on this currently they're estimating for 2025 and there's their ju estimate they're at 2.63% is what they're expecting that Cola cost of living adjustment to be for your individual Social Security Now it likely will change slightly as we get closer to that could be a little better could be a little worse um but again that's where it's coming in right now and they're do a nice job of estimating that it's usually fairly close to what that actually is when the year comes around so what does that mean to you so right now in the United States the approximate average social security for an individual received gross is $1,862 that's what the average individual receives before taxes are withheld before Medicare Part B comes out if you're uh 65 and older or having um any of that sort of withholdings come out so if we get a 2.63% increase that would be the equivalent of the average person getting a $49 a month increase to Social Security again gross before taxes before the Medicare Part B any of that sort of stuff comes out so that's right now where things would land with that now you may be saying boy $49 a month what am I going to do with that obviously it increases your Social Security a little bit hopefully it helps keep keep up with some of the inflation some of the rising cost and things like that so Cola when you hear of that term out there you see that increase come on your January Social Security Now you kind of have a little bit of a background a little bit of understanding where that's coming from and all those things again we this can range depending upon where things are living there's multiple multiple facets to where this is coming from and it's pretty complex calculation when it comes down to it and again remember it's going to be effective on your January of 2025 Social Security so we'll keep an eye on it and see where that goes in there that's for Social Security Now obviously some of these other things if you're fortunate enough to have a pension it may or may not have a cost of living adjustment of it and that would be something that each pension would have in that if you're pulling income from your portfolio as an example if you have you know Investments and you're living off of maybe an old 401k or something that's generated a monthly income stream to you you maybe have a plan with your financial advisor that you have kind of a cost of living adjusted into that so you're giving yourself a little pay increase along the way so these are all things that kind of help combat that rising cost of living for you and your retirement hopefully this was helpful and so you understand with your Social Security and what that Cola may be for this upcoming year if you have questions on your Social Security we'd love to help you out here with retiring well so you can plan to retire well [Music] every success story starts with a plan the success of your retirement depends on a solid financial plan if you are nearing retirement or already retired we invite you to an informative live event to help you plan to retire well there is no cost and no obligation and dinner is on us we are Centennial wealth advisory Financial professionals specializing in retirement planning and serving all of Northern Michigan with offices in Traverse City Gaylord patosi and Cadillac our presentation will address pressing questions such as how will the presidential election impact my investments what can I do to protect against inflation and retirement am I tax Diversified how can I maximize my social security benefits will my assets be properly protected when I pass away and much more call 88868 5825 or register online and choose the date and location that works best for you Tuesday September 10th at Boon's Long Lake in in Traver City Thursday September 12th at Treetops Hunter Grill in Gaylord Tuesday September 17th at Lakeside Charley's in Cadillac Tuesday September 17th at JJ's Event Center in Alpena Wednesday September 18th at Perry hotel in pasi or Thursday September 19th at Boon Long Lake l in in Travers City the live event starts at 6:30 p.m. and is free to attend with a complimentary gourmet dinner to follow but seating is limited and tends to fill quickly call 88868 5825 or register online to reserve your seats today don't miss this important live event to help you plan to retire [Music] well remember when life was simpler when things didn't move quite so fast and the world didn't seem so complex remember that we do and as the world around us has continued to speed up becoming more complicated and still a bit uncertain we have managed to keep things simple providing sound easy to understand Financial advice and customized road maps for the road ahead from tax reduction strategies investment advice and guaranteed retirement income you cannot outlive backed by the claims paying ability of insurance companies we can be your single point of contact a single call a voice you recognize well and a partner who can be by your side for the entire Journey we can't stop the world around us but we can help ensure you're prepared for what's to come to schedule a no obligation meeting simply contact us [Music] today health insurance is often a huge concern for retirees especially for those that are retiring under the age of 65 before they can get on to Medicare you essentially have two different options you can either go on COBRA insurance or you can go on to Marketplace insurance now let's go and cover what the differences are between those different types of insurances and which one might be best for you so to start Cobra what is it well it's a continuation of your employer coverage and typically you can continue this for up to 18 months after you retire and then if your spouse uh drops the coverage because they go into Medicare you can actually continue it for up to 36 months there um the benefits of this Cobra coverage is you're essentially continuing the same coverage that you've had your working years so you know what the deductible is you know what the max out of pocket is and all those different benefits the big drawback though is Cobra Insurance does typically cost a lot more as far as the premiums go um I've seen it as high as over $1,000 a month for a married couple so that is something you certainly want to make sure you're checking with your HR department on to figure out okay what is this actually going to cost me when I retire so that's one option right Cobra Insurance the other option would be Marketplace insurance this is essentially our government's Answer to healthc Care coverage under the age of 65 they created a Marketplace you can shop around um with different insurance providers and find different plans that might fit fit your needs and the premiums they're all based on your income so if you're retiring and maybe showing a lower income well guess what the premiums are going to be a little bit lower because you're going to qualify for a decent subsidy to help offset the cost of that health insurance now with Marketplace Insurance because you're paying typically a lower monthly premium the deductibles and the max out of pockets are going to be a little bit higher than you're probably um used to now these plans they're broken down into three different tiers you could have a bronze plan a silver plan or a gold plan um the bronze plan lower premium but higher deductible higher out of pocket silver plan is more middle of the road and then the gold plan obviously that one's going to cost you the most but it's going to have the most compr prehensive coverage for you so there's the two different options you can either go with Cobra or Marketplace insurance but which one's best right which one should you go with when you retire obviously there's a lot of different variables that are associated with that but let's just go through a quick scenario here and talk about um let's say that hey you you're thinking about retiring Midway through the year maybe you're not the most healthiest person that's out there and you've already maxed out your employer um health insurance deductible well in that case you might want to think about continuing with Cobra Insurance why well because that continues on your employer coverage you've already maxed out that deductible you can carry that out through the end of the year if you were to switch and go to Marketplace Insurance guess what you'd be starting a whole new insurance plan a whole new deductible a whole new max out of pocket and if you're telling me Nick hey I'm not the healthiest person that's out there and you're going to use this health insurance frequently it's probably in your best interest to just continue on COBRA for as long as you can but then on the flip side if you said you know what Nick I'm I'm pretty healthy I very rarely use my health insurance um I don't think I want to pay close to $1,000 a month for Cobra Insurance well then maybe in that case uh Marketplace might be the best route to go um often times you can find a zero premium Marketplace plan if you are showing a lower income so there's just a highlevel overview on okay the different options that you have when you retire for health insurance here at Centennial wealth advisory we have a whole team behind the scenes that that's all they do they specialize in health insurance so we can walk right beside you and help go over all these different variables crunch the numbers and determine which option might be best for you for health insurance when you retire so please give us a call schedule free no obligation consultation the number is right on the screen and you can also find out a lot more information online by going to our YouTube channel thanks so [Music] much every success story starts with a plan if you are nearing retirement or already retired we invite you to an informative live event to help you plan to retire well our presentation will address pressing questions such as how would the Presidential election impact my investments what can I do to protect against inflation and retirement am I tax Diversified how can I maximize my social security benefits will my assets be properly protected when I pass away and much more call 88868 5825 or register online and choose the date and location that works best for you the live event starts at 6:30 p.m. and is free to attend with a complimentary gourmet dinner to follow but seating is limited and tends to fill quickly call 88868 5825 or register online to reserve your seats today don't miss this important live event to help you plan to retire well every business says they're better but the ones that earn and display the BBB seal back back it up it instantly identifies businesses that are committed to operating with Integrity honoring promises and telling the truth makes you wonder why every business doesn't have it so look for it because it's looking out for you that's why it's the sign of a Better Business and find a better business anytime at bbb.org [Music] living life isn't always easy it puts up challenges and obstacles you'll have to overcome there are responsibilities you put an effort to provide and take care of your family to save and invest to balance work and life planning is the first step to succeeding plan to retire [Music] well hey welcome to this segment on make your money behave hey how can we do that what are my options that's why I'm going to use this whiteboard here and go back to the classroom setting and have a little fun you might want to review this because obviously there's a lot there and so if you want to watch this again we have a great YouTube channel you go to youtube.com retir andwell and you can watch it as many times as you would like let's dive in okay this first make your money behave I'm going to call C as in currency okay um it's liquid it flows the rates are not locked in you know it's a short-term money easy to get to maybe your emergency fund is there uh checking and savings account uh no Market risk so we can let our money just kind of float along um with the behavior of the sea the next one is make your money behave like an escalator okay you're just going to ride that escalator up now with these products and what you have there is you get fixed rates you know you uh you know exactly what you're going to get there's no Market risk uh there's no fees in these and typically you can lock your rates in from you know anywhere from like 2 to 10 years depending on how long you want that locked in rate um okay so we're just going to ride the escalator up you can make your money behave that way the next one is we're going to have to spend a little time on this and uh we can't do this one without knowing the market but we're going to call this St stair step money okay and so just like many of you walk up steps all the time you can actually make your money behave like stair steps and uh then you have the good old roller coaster this is what so many of you are familiar with this is the roller coaster of risk this is your stock market risk bond market risk um you know when you're going from here to here your hands are up you're saying this is great we're having an awesome time when you're going from here to here you're probably grabbing on to anything you can hold on to and maybe even closing your eyes because you know that's your free fall and so oh we're back on a nice ride there and so um let's go through yeah what's what's great about that well potential returns you know you can have some home runs there um but when you're making your money behave every single one of those behaviors have an aster every investment has an aster and so now let's talk through what the asteris look like and then we'll really narrow in on how these products work um the first one is when you're in this Currency Bank liquid maybe cash on hand uh you got to look and be aware of your rate of return you know I see people that uh are getting literally nothing 0.1% okay on their money that's even liquid and so maybe they're missing some opportunities but you want to definitely look into what your short-term rate of return is uh with those um the aster on these well once you lock into those rates for however long uh that time is uh what they're doing is they're saying okay well you do have access to your money but they're going to limit to a 10% annual free withdrawal uh if you wanted to take more out then there can be some uh surrender charges um if you say hey I don't want this anymore well then you you know potentially you're going to have to pay some surrender fees so by locking it up for a little bit of time you're going to get locked up the rate um over here okay uh I'm going to explain how these work Aster is similar 10% free withdrawal uh annually so you can take from it you just can't take all of it without paying a little bit and then obviously those surender fees if you were to give it up but um these are now connected to the stock market so I just chose uh a couple returns and I said okay what if the the year did a positive 16% positive 5% minus 37% and then a positive 26% and so how these work is you can either get a 10% cap potentially again I'm just using round numbers um or you might want to participate with the market at let's say 60% participation and so I just mapped over these returns over here and so how this works is if the stock Mark the S&P 500 is up 16% and you chose this 10% cap if it was there then you would make a 10% so you would be up when the stock market's up the next year okay but sorry backing up one second it's capped at 10% okay with the participation rate it's 60% of 16% which is about 99.6% okay so that's how that works over here positive 5% well you're going to get all 5% there if you had the participation rate you're going to be up about 3% now here's the one - 37% in this situation this is where you get a 0% this is where you protect your principal this is where you do not participate in the loss okay over here you took the 37% loss over here you didn't and then then oh the next year it's up 26 so if you had a cap you would be up 10% you register your cap if you are in the participation you know you might be up 15.6% and so you can see that when the Market's up you're up and when the Market's down you're not so if if you want help making your money behave please give us a call here at Centennial wealth [Music] advisory if you are nearing retirement or already retired we invite you to an informative live event to help you plan to retire well call 88868 5825 or register online and choose the date and location that works best for you the live event starts at 6:30 p.m. and is free to attend with a complimentary gourmet dinner to follow but seating is limited and tends to fill quickly call 88868 5825 or register online to reserve your seats today [Music] 57% of employees say that finances are the top cause of stress in their lives this is one of many findings from a PWC survey Human Resources managers and business owners we will partner with you to help your employees at Centennial wealth advisory we focus on education and the health of the whole person we offer a complimentary Financial Wellness workshop with food provided for your team we all want our employees to be productive at work but most importantly we want them to flourish in every area of their [Music] life let's talk a little bit about saving money when when maybe you don't have a whole lot of extra money sitting in your savings and as you've probably already heard delaying savings for retirement can be detrimental so you want to start early and and do as best as you can to start building that retirement portfolio at an early age so let's walk through eight helpful tips for you to consider the first pay yourself first uh even if it's a small amount consider the longterm impact of saving for your retirement so again when you get that paycheck go ahead and assume okay I've got to set some money aside for for me for the long run and build up that long-term savings second idea is to automate the process so your employ employer may offer some type of retirement savings plan if you can uh if you don't have that such as a 401k or simple IRA or anything like that through your employer then you can always set one up on your own you can open a traditional IRA or potentially a Roth IRA and have a certain dollar amount withdrawn from uh from your bank account in those examples and have it say pick the first of the month or whatever date it is and have that uh start getting invested third option get a company match if you're some employers may offer some type of dollar for dooll uh match up to a certain certain amount so as an example let's just say if you contribute $1,000 and your employer offers a a match up to that $1,000 now you have $2,000 in your retirement uh account so that is quite the return on investment if I look at that and say you put a th000 in and now you have 2,000 just based on on the contributions and that employer bch definitely take advantage of that fourth analyze your budget you know a lot of times people aren't really sure where their money's going uh you you need to look at maybe your credit card statement every month and sort of see well wait why where did that money go and and you start to see some of the holes in your plan just as an example let's assume you're you're going to the coffee shop and getting a a $5 coffee versus Maybe making it at home for less than 50 CS well if instead you just took that $5 each each week and and found well there's $20 a month that could be going towards your long-term retirement savings versus coffee so that's a a basic example to consider number five start saving something uh it's it's valuable to learn early on to be a saver even if it's $5 per week as we were talking about and and then learn the benefits of compounding interest so if you put that $20 a month aside and and after the course of the year now you've got you know $240 that you've contributed but then if you're earning interest on that money as it goes forward that compounding effect can be so vital as you build a retirement savings uh another idea is to increase your income if if you get a pay raise uh then what about setting aside that those additional funds into your retirement so if if you get that little bump up in Pay even though I know today's world a lot has to do with inflation and the challenges that everyone's facing there but if possible find a way to tuck a little extra aside seven leverage windfalls so maybe you're you've received some type of inheritance or or it's pretty common people will find oh we've got a little bit of a tax refund coming uh in the spring well instead of spending those additional funds what about finding a way to set that aside for uh your retirement versus spending all that money that you have right at right then lastly learn how to invest um there are there are plenty of materials available to you uh to start educating yourself on retirement uh here's our our uh Shameless plug here you can go to youtube.com/ retiring well we have a multitude of videos and you can click there and subscribe to our YouTu YouTube channel uh you can go to our website senden wealth.com Vlogs uh SL which has a a video log of all of these different videos typically in three four five minute Clips that'll that'll specifically break down for you uh different areas of retirement planning earlier I mentioned the idea of well should I use a traditional IRA or a Roth IRA that comes down to different tax implications depending on which one you use and so again we offer you those resources or you're always welcome to give us a call here at Centennial wealth advisory we're happy to sit down with you and have a conversation [Music]