"Gray divorce" among Americans over 50 has skyrocketed, especially for those over 65. This trend poses significant financial risks for women, who typically have lower incomes and less savings compared to men. To protect themselves, women should take steps such as:
* Understanding household finances
* Having access to their own funds
* Claiming Social Security strategically
* Saving alimony
* Considering a prenup or postnup that safeguards financial interests if the marriage ends.
For ex-spouses who have been married for over 10 years, Social Security rules allow them to claim benefits based on their former partner's work history. If that ex-spouse dies, the benefit value can potentially double, providing financial security for the survivor.
Women may claim Social Security at age 62, but since they live longer than men, claiming later is recommended, even if it means a temporary reduction. This is because they need their benefits to last longer and Social Security offers guaranteed income for life. Delaying claiming also increases the benefit amount due to delayed retirement credits. Additionally, women often save less than men for retirement, making guaranteed income sources like Social Security even more crucial.
Inflation is slowing, which means Social Security checks may not increase as much in the future. To prepare, retirees can:
* Earmark extra cash to stash away for emergencies.
* Take advantage of higher interest rates on savings accounts and certificates of deposit.
* Review monthly expenses and cut back where possible.
* Consider investments, such as annuities, to supplement income.
* Seek guidance from a financial advisor to plan for retirement needs.
The shift from pensions to 401(k) plans has left individuals responsible for retirement savings. Research shows 77% of Americans believe this makes it harder to achieve financial security. Despite the desire for pensions, they may be risky and unlikely to return. Some support expanding Social Security or personal retirement accounts, while portable 401(k)s are seen as more suitable for the modern workforce.
Starting March 2, 2024, millionaires will cease contributing to Social Security, leaving a funding gap. This may lead to benefit cuts by 2034. Democrats propose raising payroll taxes on the wealthy to address this, while some wealthy individuals advocate for taxing investment income like earned income. These proposals aim to maintain Social Security's financial stability and potentially increase benefits.
Saving for retirement early is crucial due to compound interest, which allows earnings to grow exponentially over time. Young workers have an advantage as their savings have more time to compound. Research indicates that many adults lack retirement savings, urging action. Proposed government bills aim to promote early savings. Even without these measures, young individuals can utilize IRAs, especially Roth IRAs, which offer tax-free withdrawals. Starting early with even small contributions can secure a financially secure retirement by maximizing the power of time.
Both Democrats and Republicans have pledged to safeguard Social Security and Medicare amidst financial concerns. Democrats propose expanding benefits and increasing taxes for high-income earners, while Republicans favor a commission to examine government spending. Experts emphasize the need for action to secure the programs' viability for the millions who depend on them.
The future of Social Security and Medicare is a crucial topic in the presidential election. President Biden plans to protect the programs by increasing taxes on the wealthy, while Republicans are considering a commission that could potentially reduce benefits. Democrats support higher taxes for the wealthy, whereas Republicans favor a bipartisan commission. Advocates are concerned that the commission could lead to benefit cuts. Additionally, Biden has suggested empowering the government to negotiate drug prices and enforcing minimum staff levels in nursing homes.
Trump and Biden have differing views on the future of Social Security. Trump suggests cutting "entitlements," while Biden has released a budget proposal strengthening Social Security and Medicare. This will directly affect beneficiaries, with Trump's potential cuts reducing benefits and Biden aiming to enhance them.
