Good afternoon. Today's issue is about the money decisions that look settled until you actually run the numbers. What's good for your money is changing in today's economy. Knowing the changes is how to stay ahead.
On The Money Today:
A major Social Security raise is coming in 2027, but the fine print changes what it actually means for your check
A $1.5 million 401(k) sounds like a win until the IRS comes calling for its cut
Fidelity's savings benchmark for 50-year-olds might have you rethinking your own number
Let's get into it.
BEHIND THE HEADLINE
Here's how your 2027 raise stacks up against real inflation, going back almost a decade
The catch in this year's Social Security raise isn't the number itself, it's whether that number actually keeps pace with what you're paying. This chart lays out COLA against real inflation since 2019, so you can see for yourself whether 2027's raise is closing the gap or just running in place. Keep reading for the full story on what's driving next year's raise.
RETIREMENT
$1.5 million in your 401(k)? Here's what your RMD taxes will look like and the best trick to lower them
Required withdrawals from your retirement account kick in at a set age whether you need the money or not, taxed as regular income. There's a specific move that can shrink that bill years before it ever arrives.
Why it matters: RMDs can trigger Medicare surcharges and make more of your Social Security taxable, stacking costs on top of the tax bill itself.
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NEWS
Middle-aged Americans have just $215,700 in their 401(k)s. Fidelity says they'll need 10 times their income to retire. Where do you stack up?
Fidelity has a target for what you should have saved by 50, and most people are falling well short. See the number for your age bracket, and what to do if it stings.
Why it matters: This is the number that decides whether Social Security has to cover the difference in retirement, and by how much, so it's worth knowing before the decision's already made for you.
MUST READ
A major COLA increase is coming for benefit checks next year, and early forecasts put it among the largest hikes in 25 years. Before you celebrate, there's a detail buried in how that number actually gets calculated.
Why it matters: How your COLA gets calculated determines whether that "raise" keeps pace with what you're actually paying for groceries, gas and everything else this year.
MONEY IQ
Roughly what share of US households, headed by someone 65 or older, have a net worth of $1 million or more?
ALSO MAKING THE ROUNDS TODAY
INVESTING BASICS: Robert Kiyosaki sounds alarm on $40T US debtload, warning that cash savings are losing value fast, and pointing to what he's buying instead to stay ahead of it
ECONOMY: Bank of America warns Kevin Warsh's Fed strategy 'works like a tax on the economy,' here's how to protect your money
ECONOMY: Your retirement savings and home equity now carry more weight than ever, as wages sink to their lowest share of the economy since the Great Depression
REAL ESTATE: A tree you never planted could still leave you facing a fine or even jail time, after a cracked sidewalk left one homeowner with a $1,200 bill
MONEY IQ ANSWER: HOW DID YOU DO?
The correct answer is B) 25%. Roughly 1 in 4 households headed by someone 65+ have a net worth over $1 million, according to Federal Reserve data. "Senior" and "wealthy" overlap more than people assume, which is exactly why a tax break aimed at 65+ ends up skewing toward the top earners in that group.
That's a wrap for today! Before you go, we'd love to know what you thought of today's newsletter. Hit REPLY if you have more to share — we read every one.
See you soon with another quick roundup of the financial news that matters.
