As an American taxpayer, financial planner, and part-time radio host, one of my self-appointed responsibilities has been to enlighten our audience as to upcoming financial changes that will impact nearly everyone. This time of year, Congress and certain Departments of the Administration are busily preparing annual changes to taxes and our massive Social Programs, including Social Security and Medicare. My objective, one that I have been pursuing for years, is to disseminate information as soon as it is made available to the public.
Before I summarize changes that were released this week, I will render my long-held opinion, and I expect few will be surprised with my conclusion.
Every year, the government demands a larger portion of our purchasing power.
One of the main tools used by government to fleece the public is the annual Cost-of-Living Adjustment, or COLA. Understating the COLA, as it gets applied to Social Security benefits, reduces purchasing power for the 70+ million recipients of monthly Social Security benefits. This practice has been so pervasive that Americans have lost 30% of Social Security Benefits’ purchasing power since the year 2000. The paltry 2.5% increase in Social Security benefits is a ridiculous understatement of the actual cost of living we all experienced over the past year. We consider misuse of the COLA.
COLAs can also be used to increase our costs, providing a double whammy for taxpayers. This week, we were treated to another data set exemplifying this form of financial manipulation. The subject is Medicare premiums, which are rising by 5.9% (the government stated Medicare COLA), more than double our Social Security monthly benefit increases. Since Social Security recipients have Medicare premiums deducted from their monthly benefits, our net benefits suffer. Adding insult to injury, the Medicare Part B deductible will increase a whopping 7.1% for 2025, further reducing our purchasing power.
Once again, America’s “seasoned citizens” will experience a setback in their lifestyles.
Van Wie Financial takes great pride in our willingness and ability to keep our audience informed of changes as soon as they are released. We take no pleasure, however, in our analyses when they lead to inevitable conclusions.
On a positive note, there is a pinpoint of light coming in 2025. Tax brackets have been broadened by about 2.8%. Lower tax brackets will apply to more of our income next year. Also, President-elect Trump has proposed elimination of taxes on Social Security benefits. Fun to imagine, but don’t hold your breath.
Van Wie Financial is fee-only. For a reason.
