Social Security Adjustment
While the official number will not be out until October, the Cost-of-Living adjustment is now estimated to be an increase of 3.7%, which is a whopping 1% lower than the last report. Much of this is a direct result of the June inflation numbers which were down 0.4% from May. However, it is almost a 1% increase over the 2.8% adjustment for 2026. The current estimate would raise the average benefit by about $73. Unfortunately, a benefit of only about $900 per year isn’t going to do too much to help, although it is something. We will report the final number when it is released later this year.
Senior Health Care Costs Up Again!
Each year Fidelity comes out with the anticipated lifetime cost for healthcare for those age 65. The news is not good. The estimated cost rose to $185,000 per person ($370,000 for a couple), which is a 7.5% increase. Included in this cost is Medicare Part A for hospital costs (free), Part B for testing and doctors (premium based on income ranging from $203 to $690 per month), and Part D for drugs (premium also based on income ranging from $0 to $90 per month) and out of pocket costs (deductible and co-pays), but nothing for a supplement. That could likely add another $30,000 to $60,000 over one’s lifetime depending on the supplemental plan chosen. In what we consider a major flaw in the report is that none of this accounts for long-term care costs, which can range from $23,000 annually for day care and up to $128,000 for long-term care in a facility.
The Hidden Cost of Selling Your Home For Those On Medicare
For many people in retirement, the single biggest asset of their net worth is the equity in their home – one that they may have lived in for a long time and has appreciated in value. Regardless of one’s age, when a home is sold for a profit, a capital gains tax is incurred on a primary residence. However, if the owner has lived in the home as a primary residence for two of the past five years, the first $250,000 is excluded from tax. Double that amount if you are a married couple. The exclusion amount has not increased since 1997. However, if you are a senior and on Medicare, there could be a hidden cost, and it comes in the form of the premium paid for Medicare as the premium cost is based on income. Here is an example to consider. Mr. and Mrs. Retiree bought a home in 1997 to raise their family. The cost of the home was $275,000 and over the years they improved the home with an addition and a pool at a cost of $75,000. Thus, their total cost basis in the home is $350,000. Between Social Security and investments, their income is $100,000 per year.
Like many retirees, they want to sell their home and downsize which will free up some of the equity in the home for investments, travel, etc. They are ecstatic when the house sells for $1.2 million. Now comes the trap of a capital gains tax and a possible increase in Medicare premiums. First, they take the sale price of $1.2 million and subtract the $350,000 tax basis leaving a capital gain of $850,000. The first $500,000 of gain is excluded leaving a taxable gain of $350,000 on which they will pay about $70,000 (maybe more if subject to the Obama Care tax) in capital gains tax. But the hidden cost comes two years later when Medicare increases the premium cost for Part B and D because $100,000 of their retirement income jumps to $450,000 ($100K + $350K) for one year. This could easily cost Mr. and Mrs. Retiree an increase of several hundred dollars each per month for one year.
This phenomenon is the result of Medicare’s calculation of the Income-Related Monthly Adjustment Amount (IRMAA), which is based on Modified Adjusted Gross Income (MAGI) with a two-year lookback. When their income goes back down the subsequent year, things return to normal. There is a bit of hope to consider. Medicare offers what is called a “Life Changing Event” exclusion like retirement, divorce, sudden and permanent loss of income, etc. You can file a form with Medicare and hope they agree not to include the income due to the unique event of selling your home.
Overpaying For Mortgage Is A Common Problem
According to Bankrate, almost 90% of mortgage borrowers overpay for a mortgage. In fact, they calculated that based on data from 2022 that borrowers will pay $65 billion more in origination fees and interest than they needed to if they had just shopped around with multiple lenders. That equates to about $3,300 per year or almost $80,000 over the life of the loan. When it comes to the different types of mortgages, conventional borrowers overpay 89% of the time, while FHA loan borrowers do so 83% of the time, and VA borrowers are at 81%.
FHA and VA loans come with more disclosures which might explain the lower percentages. As an example, according to Freddie Mac the average rate is 6.49% for a 30-year fixed rate mortgage but could be as low as 6.23% or as high as 6.71%. The payment on a 6.23% loan of $400,000 is $2,458 or $884,880 over the life of the loan while one at 6.71% has a monthly payment of $2,584 or $930,240. Apparently, it pays to shop around even though it may be inconvenient and time consuming.
Borrowing Too Much From A Life Insurance Policy
If you own a cash value life insurance policy (whole life, universal life or variable life) one of the benefits is the ability to withdraw money when needed without paying taxes. The rules vary by policy so be sure to investigate the provisions well in advance of borrowing money. Here is how it generally works. You buy a $1 million dollar policy and pay an annual premium of $10,000 for 30 years. When you reach age 65 and retire, you want to use the money in your policy for cash flow or to pay for a big purchase. The total value of the policy is now $650,000. Since you made $300,000 in premium payments, the first $300,000 you withdraw carries no income tax because you are recovering the cost (your tax basis) of the policy. Once you exceed this amount any amount you withdraw above your basis is taxable. To avoid the taxation, most insurance agents suggest that you “borrow” the money from the policy either to use for life’s expenses and/or to pay the annual premium. You will also incur interest costs just like any loan. The interest may be fixed or variable depending on the policy provisions. By “borrowing” the money, there is no income tax incurred.
Let’s suppose you do this for many years and the loan plus interest is now $225,000. When you die the $1 million death proceeds will often be reduced by the money you withdrew ($300,000) and then it will pay off the “loan” ($225,000) leaving your beneficiary with a death benefit of $475,000. Because life insurance proceeds are not income taxable, no income taxes are due. Sounds like a good plan and in many cases it is. BUT there can be a trap. Should the “loan” exceed the collateral (cash value) of the policy then either a BIG premium is needed yearly going forward to keep the policy in force, or the policy will be cancelled. When the cancellation happens, the so-called loan becomes taxable, but the policy owner gets little or no money. This happens more often than you would think, especially when the borrowing starts at an early age and/or the insured lives a long time. If you have a policy from which you are borrowing money, give us a call to do a review so that you can potentially avoid this tax trap.
40 Years Strong. A New Headquarters.
Last week, we shared the exciting news of our move to a new headquarters. On August 17, we’ll officially open the doors to our new office at 300 Park Place Blvd. Thoughtfully designed with collaboration, client experience, and future growth in mind, this space reflects the people and values that have shaped ProVise for years. While our address is changing, our commitment to serving our clients with the same personalized care remains the same. Here’s to new beginnings in a space built to support the work—and the relationships—that matter most.
ProVise Clearwater Headquarters Relocation Marks 40 Years of Growth
In The News — ProVise And Ray Ferrara
We are pleased to announce that ProVise was ranked as the 249th largest Registered Investment Advisor in the United States, 11th largest in Florida, and third in the greater Tampa Bay Area. Financial Advisor Magazine 2026 RIA Survey and Ranking based on assets under management as of December 31, 2025. ProVise has consistently been ranked by the magazine over the past twenty years. This recognition is a compliment because unlike other surveys where firms pay to get recognized, we did not pay for this recognition.
ProVise Management Group was included in Financial Advisor Magazine’s 2026 RIA Survey & Ranking. The ranking is based primarily on assets under management reported by participating firms and regulatory filings as of December 31, 2025. Participation is voluntary, and no compensation was paid to obtain this recognition. Rankings are not indicative of future performance and are not representative of any client’s experience. This recognition should not be construed as an endorsement of any firm or its advisory services.
Two years ago, our Founder and Executive Chair, Ray Ferrara, CFP® was named to the inaugural class of the Tampa Bay Titan 100 which recognizes top business leaders across our five-county area. This is the third and final year that Ray earned this distinction and now is in the Hall of Fame. A special Awards Dinner will be held on October 22nd at the Yuengling Center at University of South Florida.
The 2026 Titan 100 Tampa Bay recognition is awarded by a third-party organization, Titan CEO, based on criteria that include demonstrated leadership, vision, passion, influence, and reputation within the Tampa Bay business community, as well as the nominee’s contributions to company growth and community involvement. Candidates are nominated and selected through Titan CEO’s independent review process; additional details regarding the methodology are available at www.titan100.biz/tampa-nominations. This recognition is not indicative of any client’s experience and is not a guarantee of future performance or success. No compensation was provided in exchange for this award; however, ProVise is an independent sponsor for Titan 100. Sponsorships and the selection of awardees are independent of one another. This recognition should not be construed as an endorsement of any firm or its advisory services.
Dying With Crypto Is A Problem
One of the benefits of investing in cryptocurrencies is the privacy of it all. Many articles have been published about rogue countries using crypto to avoid sanctions and drug dealers love it for the same reason. While privacy can be a good thing, it can also be a problem. When you die, who is going to know that you own it and/or where to find it? Even when you do tell them, they will need your password which is often a long combination (think 20-30) of numbers and letters. A better way to keep track of it all is to use a custodian, which is like a brokerage account, making it easier to find and they keep track of it all for tax purposes. As you know, we are not big fans of cryptocurrencies, but if you own some, then consider the consequences at death.
Foreclosure Rates
Due to the soaring costs of homeownership, foreclosures have increased by 26% from one year ago, with approximately 119,000 homes entering foreclosure during the first quarter of 2026. This represents the largest increase since the COVID-19 pandemic, when government stimulus programs helped many homeowners stay current on housing costs.
While many homeowners benefited from historically low mortgage rates and rising home values in recent years, increasing expenses such as HOA fees, property taxes, homeowners’ insurance, and everyday living costs are putting greater financial strain on households. Recent homebuyers may be particularly vulnerable, as higher interest rates and softening home prices have left some homeowners “underwater” on their mortgages, meaning they owe more than their homes are currently worth. For some families, this combination of rising expenses and declining home equity is creating difficult financial decisions. If these trends continue, foreclosure activity could remain elevated as more homeowners struggle to keep up with housing-related costs.
PCE Inflation Overstated?
The provider of the Personal Consumption Expenditures (PCE) price index recently announced some minor changes to how it calculates inflation. The Bureau of Economic Analysis (BEA) makes updates every year to the PCE across a range of widely covered statistics, with the goal of providing the most accurate data for the U.S. economy. Because PCE is the Federal Reserve’s preferred inflation measure, these changes can affect how the Fed uses its policy tools, such as the target range for the Federal Funds rate.
According to research by Goldman Sachs, the changes are expected to lead to a slight downward revision in May’s core inflation numbers, from 3.4% to 3.2%. The revisions will be also reinstated for inflation data tracing back to 2021. The three components included in this year’s PCE’s updates are computer software and accessories, portfolio management and investment advice services, and legal services. In each case, the BEA is revamping its methodology to improve the inflation measures on these components. For example, the BEA is replacing a volatile consumer inflation measure with a more consistent producer inflation measure for legal services.
So, does this mean inflation was overstated? We won’t know until the changes go into effect on September 30th this year, but it’s important to understand that the BEA didn’t change what people paid for goods and services. It’s simply trying to improve the accuracy of its widely followed inflation measure. We don’t think a 0.2% downward revision to core inflation is meaningful enough to prompt a Fed rate cut, with inflation well above its 2% target and a healthy labor market.
Up Your Assets™
Episode 36: The Ladder of Success Almost Cost Me Everything I Really Needed
In this episode, Ray Ferrara, CFP® interviews Tom Giachetti about his life journey, the lessons learned from his illustrious career, and his new book, “The Ladder: The Precarious Climb to Success.” They explore the mechanics of work-life balance, faith, and the importance of personal growth at any age. Have you ever felt like achieving success in life can be overwhelmingly complex? Well, you’re not alone. During this very heartfelt conversation, Tom shares how his focus may have been missing the mark at times and the reality is; sometimes you are going to do it WRONG. However, the good news in this triumphant episode is… IT IS NEVER TOO LATE TO FIX YOURSELF! Listen today for repair instructions.
Acknowledgements and Important Disclosures
From the Up Your Assets website
Apple
Spotify
YouTube
