When and How Will They Fix Social Security

After incurring another $1 trillion of debt in five months, the U.S. national debt topped $40 trillion. Everybody thinks we need to cut back on government spending, but everyone wants to cut their neighbors’ benefits not their own. Social Security once again finds itself on the verge of depleting its trust fund by 2032. The largest single block of voters with the highest percentage of voters are “seniors” so any politician who wants to be re-elected needs to help find a solution.

Let us be clear; it is not the end of Social Security. If that happens, recipients’ benefits would be cut about 21%. It does not mean that there is no money for Social Security, as those that are working are still contributing. Congress will eventually fix the problem, but it is likely to be later rather than sooner because there is no easy fix. Benefits will go down; taxes will go up. So, what is likely to happen? Here are some possible solutions – none of which by themselves solves the problem.

1. Currently, up to 85% of Social Security is taxable if one’s income is over $34,000 and this has not changed since the mid-90s. The revenue created by this income tax on Social Security goes back into the Social Security trust fund. Expect that 100% will be taxable at some level of income.
2. Next, the cap on earned income subject to tax, currently $184,500, will increase dramatically but phased in over time. Social Security taxes are paid by workers and their employers, so the higher cost is likely to reduce consumers’ spendable income and corporate profits. While this is a negative in the short run, we think the economy will adjust over time. The cap could create a donut hole where the tax stops at a certain layer of income and then picks up at another, or the cap could disappear entirely. While this latter point may sound good politically, it is unlikely to happen.
3. Raise the tax rate on both the employee and employer over time by 1-2%.
4. For those under the age of 50, they are likely to see a delay in their ability to access Social Security with the earliest age phasing from 62 to 65 and full retirement age rising from 67 to 70 over time with no further increase in benefits except cost-of-living increases.
5. A cap on the maximum amount of benefit anyone can receive regardless of the amount they may have paid in employment taxes.
6. The cost-of-living increase each year could be modified to make it grow more slowly.
7. Institute a Social Security tax on interest, dividends, and capital gains.
8. Lastly, expand the workforce as quickly as possible.

Needless to say, none of these are popular, but there are not many alternatives. When Congress takes up the matter, you should expect the “fix” to be some combination of the above.

COLA for Social Security Down Again

Last month we reported that the 2027 cost-of-living adjustment (COLA) for Social Security was projected to be an increase of 3.7%. Now with two more months before we get a final number, the estimate declined slightly to an increase of 3.4% to 3.6%, depending on who is doing the forecasting as a result of low inflation numbers for July. This is not good news for those for whom Social Security is their main source of income.

When is the Last Time You Checked Your Beneficiary Designations?

Did you realize that a beneficiary designation and transfer of death (TOD) and payable of death (POD) designations take precedence over your will or trust? How long has it been since you pulled all your accounts to make sure you have the right beneficiaries today? Yes, we mean actually get a copy of your life insurance policies – both personal and group, annuities, IRA, 401k, 403b, deferred compensation plans, veteran benefits, etc.  

 Ask yourselves the following questions:  

• Have you gotten a divorce or remarried? 

• Did you change jobs or retire and leave a 401k at your past employer? 

• Do you remember who you named as your beneficiaries? Do you have contingent beneficiaries? 

• Has one of your beneficiaries passed away?  

• Is it possible that you did one and it wasn’t properly filed or got lost in the process?  

Except for a retirement plan covered by ERISA (think 401k, 403b, pension, or profit sharing) you can name anyone to be your beneficiary. By law, ERISA plans require you to name your spouse unless he/she has signed an informed waiver. When it comes to retirement accounts, the spouse has several options from which to choose, including rolling it into their own plan. For most other beneficiaries, they must withdraw the money and pay taxes over the next ten years. Use the words, “per stirpes” where appropriate, as it passes the money down the bloodline to children or grandchildren. 

Is AI Taking Jobs?

Every transformative technology changes the labor market. The steam engine reduced the need for manual labor, computers automated administrative tasks, and the internet reshaped entire industries. Artificial intelligence appears poised to follow the same pattern. While AI will undoubtedly replace some jobs, history suggests its greatest impact may be the creation of new opportunities, industries, and ways of working.

According to the World Economic Forum, AI and information processing technologies are expected to create 11 million jobs by 2030, while at the same time displacing 9 million others, resulting in nearly 2 million net job gains. There’s a clear shift towards increasing automation at companies, but that isn’t the only value driver of AI. Since ChatGPT’s release in 2022, people have learned how to make AI complement and even enhance their work. Some enhancements might be miniscule, like editing emails or summarizing meeting notes, while others can be transformative such as creating complex dashboards or even prediction models.

For now, it’s too early to determine how exactly AI will distort the job market. Only time will tell. But as with any transformative technology, there will be new efficiencies that displace jobs and new skill sets required that create jobs.

Watch: Ray Ferrara and Eric Ebbert on 40 Years of ProVise

In this special interview celebrating our 40th anniversary, ProVise founder Ray Ferrara sits down with CEO Eric Ebbert to look back on 40 years of the firm — from the $500 stock tip that started it all to the toughest markets he’s guided clients through along the way. It’s a candid, personal conversation on what’s carried the firm this far, and why he still believes the hardest questions clients ask aren’t factual, they’re emotional.

Watch here: 40 Years of ProVise with Founder Ray Ferrara

Is Pet Insurance Worth It?

We all want to keep our pets happy and healthy, just like any other member of the family. But does that mean they should have health insurance coverage as well? For many pet owners, the answer may be yes.

Pet insurance works similarly to other types of insurance by reimbursing owners for eligible veterinary expenses when a pet becomes ill or is injured in an accident. Most policies fall into one of three categories:

• Accident and illness coverage
• Accident-only coverage
• Wellness coverage for routine and preventive care

According to The Wall Street Journal, the average cost of pet insurance in 2026 is approximately $47.87 per month for a policy that includes $5,000 of annual coverage, a $500 deductible, and an 80% reimbursement rate. As veterinary costs continue to rise, many pet owners are finding that insurance can provide valuable financial protection, especially for pets with ongoing health concerns or a higher likelihood of injury.

Others argue that it may be more cost-effective to self-insure by building a dedicated emergency fund for pet-related expenses. However, it is important to understand the potential costs of care before making that decision. A study by the pet care company Rover estimates that the lifetime cost of caring for a dog that lives to age 10 is approximately $34,550. For a cat that lives to age 16, the estimated lifetime cost is around $32,170.

Without insurance, veterinary treatments can be expensive. Average costs for common services include:

• Exam consultation: $100 to $150
• Three- to five-day hospitalization: $1,500 to $3,500
• Emergency surgery: $1,500 to $5,000
• Wound treatment and repair: $800 to $2,500

Like any insurance decision, you should evaluate your pet’s unique circumstances. If your pet requires prescription food, ongoing medication, or specialized medical care, insurance may help manage those costs and provide peace of mind. On the other hand, if your pet has relatively low healthcare needs, setting aside money in a dedicated savings account may be a reasonable alternative.

Financial Certifications Come in Many Shapes and Sizes

The oldest financial designation still in use today is “CPA” standing for Certified Public Accountant and began in commerce in 1896. This was followed by “CLU” (Chartered Life Underwriter) in 1927 and “ChFC” (Chartered Financial Consultant) in 1942 with both evolving out of the life insurance industry. In the investment community, the “CFA” (Chartered Financial Analyst) was first used in 1963 and as the financial planning profession developed, the “CFP” (Certified Financial Planner™) was created in 1973. These are the most recognized professional certifications because of the high quality of education, ethics, exams, and experience that are required to obtain the designation.

Over the years, many more designations have popped up with some only consisting of very modest forms of requirements or just payment to use a designation. The Financial Industry Regulatory Authority (FINRA) lists 261 designations on its website but only has some control regarding their quality or meaningfulness. While many designations are general in nature, some have become very specific and narrow in scope. If you see someone with a long list of letters after their name, you may ask: Why?

What separates one certification from another? A certification is valid when it is issued by a recognized authority, follows rigorous standards, and requires proof of ongoing competency. The key elements are: a third party accreditation from an independent body like ANSI, ISO, or NCCA; exams are built by data scientists to ensure test questions accurately measure real-world skills; test material is based on regular studies of what professionals actually do in the field; exams are proctored securely to prevent cheating and identity fraud; certifications expire and require continuing education credits (CEUs) or retesting to stay active; the public can easily verify a credential holder’s status through an official online database; and, holders must sign and uphold professional conduct standards or risk losing their credential. At ProVise, we require every advisor to achieve the CFP® certification before they can begin providing unsupervised advice. As CFP® professionals, we must ALWAYS be a fiduciary acting in your best interest when providing financial advice.

Most Expensive States to Live in Comfortably

We all know that inflation has made it increasingly difficult to pay the bills over the past few years. The political world increasingly uses the term “affordability.” According to a CNBC/SurveyMonkey report, 63% of individuals live paycheck to paycheck, and 46% have less than $1,000 in savings for emergencies and opportunities according to the Federal Reserve. Some places to live are less expensive than others. SmartAsset recently used the MIT Living Wage Calculator data to rank all 50 states on affordability. They found that an individual needs a minimum of $80,000 in all 50 states, but it jumps to at least $100,000 in almost half of the states. Here are the top ten along with the amount needed for an individual followed by the amount needed for a family of four:

Up Your Assets™

Episode 38: Your Spouse Died. Now What Happens? Financially and Emotionally?

Widowhood is more than grief; it can be a financial emergency that could use a helping hand. In this episode, Ray Ferrara, CFP® interviews Chris Bentley, Founder and Executive Director of Wings for Widows. The two have a delicate conversation about the financial and emotional challenges faced by widows and widowers. They explore practical steps, real resources, and the importance of proactive planning to navigate loss with confidence. Lift someone UP with the good news that resources exist and share this session today!

Acknowledgements and Important Disclosures

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