They range from simple to sophisticated

Reviewed by Charlene Rhinehart
Fact checked by Vikki Velasquez

Social Security is a government program that serves about 68 million people, so you might use one word to describe it: complicated.

Hats off to the Social Security Administration (SSA), though. It produces one of the best government websites, using plain English (and 18 other languages) to explain its rules. It also has plenty of calculators and worksheets to help those entitled to Social Security benefits.

We pulled together some of our favorites. Keep this list handy the next time you’re sifting through the maze of Social Security rules and regulations.

You won’t need all 11, but some of them will likely help answer some of your questions as you start to plan for your later years.

Key Takeaways

• Social Security offers plenty of online calculators to help you estimate benefits and—if you care to know—your life expectancy, too.
• They range from simple to complex.
• The best and most accurate pull data from your actual Social Security account.  

1. Retirement Estimator

What’s more important than knowing the amount of your monthly Social Security check?

The awesome thing about the SSA’s Retirement Estimator is that it looks at your actual account to estimate your benefits. It will ask for your name, Social Security number, and your earnings last year to calculate your estimated benefits.

It gives you estimates based on different retirement ages in an easy-to-read format. There are all kinds of disclaimers on the calculator saying that it’s only an estimate, so if your situation is more complicated, these numbers may not apply. Still, it’s a good place to start. 

2. Benefits Planner

If you don’t want to enter your personal information into the Social Security website so that it can draw from your actual details on record, you can still get a pretty accurate estimate of your benefits by manually entering a whole lot of other information into the Benefits Planner.

You’ll need to know your earnings for the years that you’ve worked along with a bunch of other information, but you’ll get a similar result, assuming the information you provide is accurate.

Note that the Benefits Planner offers only an estimate based on unconfirmed information that you input, whereas the Retirement Estimator looks at your actual earnings to provide a reliable projection.

Note

If you use calculators on third-party websites, there’s no guarantee that the information will be accurate or that your sensitive data will be safe.

3. Quick Calculator

The Quick Calculator estimates your future checks and is about as simple as they come.

Enter your birth date, current year’s earnings, and estimated retirement date, and the calculator will give you an estimated payout. You can even select the amount in today’s dollars or inflation-adjusted future dollars. 

Remember that the less information you enter, the less accurate your results are likely to be.

4. Life Expectancy Calculator

If you wish to confront the idea of your mortality, check out Social Security’s Life Expectancy Calculator. Enter your gender and date of birth, and it will give you a rough estimate of how long you can expect to live if you reach certain age milestones.

The practical purpose of this calculator is to help with retirement planning. The longer you live, the more money you’ll need to support yourself. In addition, you’re more likely to experience medical issues that may require substantial amounts of money to address.

5. WEP Calculator

If you work or have worked for a company that gives you a pension based on work not covered by Social Security, the aforementioned basic calculators won’t provide an accurate representation of your benefits.

The Windfall Elimination Provision (WEP) Calculator requires you to manually enter a lot of information that you probably won’t have at the ready. You’ll have to do some digging. 

Note: Please see the callout below for important information about the termination of the WEP due to the Social Security Fairness Act of 2023.

6. Earnings Test Calculator

You probably know that your benefit amount is largely based on how much money you’ve earned. The more you make, the more you pay into Social Security, so you deserve a larger benefit, right?

The Retirement Earnings Test Calculator shows how the amount you make affects your benefits. Remember that this calculator is very simplistic—it only takes into account one of your retirement benefit variables.

7. Early or Late Calculator

Early or Late Retirement is another calculator that isolates one variable to show you how relatively small decisions can dramatically affect your benefits. It shows how waiting longer to receive your benefits will substantially raise the dollar amount of your benefit checks. 

8. Retirement Age Calculator

In the past, the retirement age was set at 65, but because Social Security has found itself low on cash—and because people are living and working for longer—the agency has slowly raised the retirement age over the years.

Your retirement age is based on your birth date. Use the Retirement Age Calculator to figure out when you can start receiving benefits. It’s not as straightforward as you might think.

9. GPO Calculator

Even if you worked for a company or organization where your earnings weren’t taxed by Social Security, you probably expect to receive spousal benefits. Up to 2024, the amount of that benefit could be reduced by something called the government pension offset (GPO).

The GPO Calculator was available to help you figure out the effect of the offset. However, the Social Security Fairness Act of 2023, described immediately below, terminated the GPO. So the calculator is now obsolete.

Important

On January 5, 2025, a new U.S. law was enacted that affects provisions related to Social Security benefits.

The Social Security Fairness Act of 2023:

• Eliminates the government pension offset, which could reduce the Social Security benefits for spouses, widows, and widowers who also receive government pensions
• Voids terms that reduce Social Security payments to people who receive other benefits, such as a state or local government pension
• Eliminates the windfall elimination provision, which could diminish Social Security payments to those people who also receive pensions or disability benefits from companies that didn’t withhold income for Social Security taxes

The Act applies to Social Security benefits payable after December 2023.

10. Spousal Benefits Calculator

When you file for Social Security benefits, your spouse may be eligible for benefits as well. The subject of spousal benefits gets quite complicated depending on individual family variables.

Simply enter some basic information, and the Spousal Benefits calculator will show you the effect on your spouse’s benefit amount.

11. Detailed Calculator

The financial situations of some individuals are simple and straightforward. The Retirement Estimator calculator listed first in this article takes into account a few variables other than age, earnings, and credit.

Many people have additional factors to consider when calculating their benefits. If that’s you, you need to use the Detailed Calculator. It’s as close as you will get to the calculator that a Social Security employee would use to calculate your earnings.

Note: a new version of the Detailed Calculator that takes into account the effect of the Social Security Fairness Act of 2023 (see callout above) will be released in 2025.

Warning

The SSA warns that the Detailed Calculator is not easy to use, and you have to download and install it on your PC. There’s no official mobile app, and the Mac OS version, though functional, only runs on older versions but not the latest versions. You can download a user’s guide and the calculator from the website.

How Do You Figure Out How Much Social Security You Will Get?

Social Security benefits are calculated using average indexed monthly earnings, which summarize up to 35 years of a worker’s earnings. A formula is applied to this average to generate the primary insurance amount (PIA). The PIA is the basis for the benefits paid out. To find out your actual benefit, use the Retirement Estimator calculator.

At What Age Do You Get 100% of Your Social Security?

You get 100% of your Social Security if you begin taking benefits at your “full retirement age.” Your full retirement age depends on the year you were born. For example, if you were born between 1943 and 1954, your full retirement age is 66. For birth years after 1954, for every year, your full retirement age increases by two months up until 1960. If you were born in 1960 or after, your full retirement age is 67.

What Is the Social Security Tax Income Limit?

In 2024, income up to $168,600 was subject to Social Security taxes. For 2025, the income limit is $176,100. Any income earned above that amount will not be taxed.

The Bottom Line

The best Social Security benefit calculators to use are those that pull your actual record from the SSA. So, always start with the SSA calculators. As long as you’re on the Social Security website, any information you input on the forms is encrypted and considered safe.

Digital ads and subscription services, with more products on the way

Reviewed by Akhilesh Ganti

It’s only a slight overstatement to suggest that Yahoo was the SpaceX of the late 1990s. Back then, the concept of using a single search engine to search the internet easily and quickly seemed as futuristic as commercial interplanetary travel or asteroid mining do today. Throw in a free email service, instant messaging, and up-to-the-hour news feeds, and Yahoo appeared poised to become the technology company for a new century.

Then Google, now Alphabet (GOOG), happened. It offered virtually everything Yahoo did except cheaper and faster. That condemned Yahoo to the unfortunate fate of devolving from a precocious upstart to a sluggish legacy company in a mere 18 months. It now exists as a diminished yet lucrative amalgam of disparate offerings, with everything from fantasy football and celebrity gossip to web hosting and maps. This is all packaged for the company’s real clients—its advertisers.

So how does this once-darling of the internet, which is now owned by Verizon, continue to make money? This article outlines a brief history of Yahoo and its business model.

Key Takeaways

• In the 1990s, Yahoo was one of the biggest names is tech. Then Google happened.
• Yahoo’s revenues peaked in 2007, shrinking every year thereafter.
• Verizon acquired Yahoo for $4.5 billion in June 2017.
• Nine Yahoo sites make up over a third of Verizon Media’s branded sites.

A History of Yahoo

Yahoo was founded in 1994 by Jerry Yang and David Filo. The two were graduate students at Stanford University. It began as a collection of websites and was originally called Jerry and David’s Guide to the World Wide Web. As its popularity increased, Yang and Filo changed the name to Yahoo!, which was an acronym for Yet Another Hierarchical Officious Oracle.

The company was incorporated in 1995 and made a series of acquisitions. Unlike other companies that were born during the dotcom era, Yahoo survived. After its revenues began shrinking following its peak in 2000, Yahoo was acquired by Verizon (VZ) for $4.83 billion in 2017.

It now operates alongside brands like HuffPost and Tumblr under the umbrella once called Oath, which was recently retooled as Verizon Media. Confusingly, Oath and Verizon Media both currently exist, and therefore sites like Yahoo are effectively being run by two different companies. This has led to disorganized management.

The Business Model

Verizon’s 2017 acquisition totally shook up Yahoo’s business model and turned the company away from the Asian market. Yahoo’s business included an equity stake in Alibaba (BABA), the astonishingly successful Chinese monolith that serves as something of a hybrid eBay (EBAY), Amazon (AMZN), and Google to China. That stake, initiated by former Yahoo chief executive officer (CEO) Marissa Mayer, kept Yahoo alive through most of its digression. Verizon chose not to acquire the Alibaba stake. It also chose to exclude Yahoo Japan from the sale.

Most of Yahoo’s business model was redundant in a sated marketplace. Despite Verizon Media’s efforts, this may still be true. Almost every Yahoo service has a more prominent, more successful, and more easily identifiable competitor. Among them are:

• Yahoo Movies vs. Comcast’s Fandango
• Yahoo Weather vs. Weather.com
• Yahoo Sports vs. Walt Disney’s (DIS) ESPN.com

But if you have an active Yahoo email account that you never bothered to close after switching to Gmail, or if you happen to click on a Yahoo-branded news link, congratulations. You are one of the monthly active users (MAUs) whom the company claims to engage. Verizon’s strategy is to leverage this engagement for digital advertising. Verizon Media currently owns branded 23 sites, including nine Yahoo sites.

Digital Ads

Ads on Yahoo sites work like any other digital ads. Yahoo sells ad space to advertisers. Ad spaces are only valuable based on the number of clicks they receive. Advertisers can choose to buy space on Yahoo sites through Verizon Media’s supply-side platform, which is more profitable for Yahoo, or on third-party demand site platforms, which is more efficient for advertisers and less profitable for Yahoo.

Verizon’s financial statements don’t differentiate Yahoo’s financial performance. But we can infer that the engagement with Yahoo sites works for Verizon, even if it’s not nearly as well as the company hoped. According to its annual report, Verizon’s media business saw a revenue increase of $1.7 billion, or 16.6% in 2018 compared to 2017. Most of this revenue increase is attributable to the influx of advertising dollars Verizon Media now collects from Yahoo sites. This makes Yahoo just barely profitable, given that Verizon Media’s operating costs also rose by $1.3 billion, or 4.1%, due to its takeover of Yahoo.

Verizon’s annual report also admits that its Yahoo acquisition is proving less profitable than expected, despite an unprecedented 22% rise in industry-wide revenues during the first three quarters of 2018. This is because the takeover injected even more competition into the already extremely competitive digital advertising market. Google currently dominates the market, but it is losing ground to Facebook and Amazon. As a result, Verizon’s current market share in digital ads is currently only 2.9%, down from 3.4% in 2018.

As it stands, Yahoo, and Verizon Media broadly, are still money makers for Verizon, but just barely. Although the digital ad industry is booming in terms of volume, Verizon’s decreasing market share doesn’t bode well for the company’s future in the space.

2.9%

Verizon’s share of the digital advertising market.

Future Plans

Verizon Media is undergoing significant changes in an attempt to save itself. The company is planning on launching a whopping 20 new products in the next six months. Yahoo Finance and Yahoo Mail play big roles in this strategy. The hope is to boost Yahoo’s profitability by better integrating the brand with Verizon’s other products and by launching subscription-based services for premium content on Yahoo’s most popular site, Yahoo Finance.

Important

Verizon Media is currently undergoing a complete overhaul. Yahoo plays a central role in this reconfiguration.

Subscription Services

In June 2019, Yahoo Finance launched a subscription service called Yahoo Finance Premium that provides investors with premium content. These include premium data and charting, advanced portfolio analytics, research reports and investment ideas, and company profiles. The site also allows investors to link their pre-existing eTrade accounts to their Yahoo Finance account. Although the service has already launched, some of these features are still being fully fleshed out.

The service comes at a price of $49.99 per month.

Note

Verizon Media also launched a similar subscription program for Huffpost.

Inbox Commerce

Yahoo has also just launched an updated version of the Yahoo Mail app, which they call a “super-app.” This update centers around a new “Deals” tab in the app, which offers individualized online shopping offers to users. Verizon Media’s CEO, Guru Gowrappan, calls this “enabling commerce through mail.” This update will hopefully provide space for Yahoo to sell more ads inside one of its platforms. In doing this, Yahoo is betting on users who are already faithful to Yahoo. This set-up could offer some insulation from the fierce competition with Google, Facebook, and Amazon. 

Yahoo News XR Program and 5G

In November of 2017, Verizon Media launched a creative studio with immersive media company RYOT to create branded augmented reality (AR), virtual reality (VR) and 360-degree video content with corporate partners. It is perhaps Verizon’s most futuristic and exciting subsidiary. In April 2019, Yahoo News, Yahoo’s second most popular site, announced it would oversee a partner program between Verizon’s RYOT Studio and high-profile news organizations including Reuters, the Associated Press, and TIME. Through this program, RYOT and Yahoo News will supposedly help other news outlets create AR and VR news content.

Yahoo News plans to monetize this venture by infusing news content with the VR- and AR-branded content — read: ads — that RYOT has experience making. RYOT will also offer partners access to its software development kit, which makes the creation of VR and AR content more cost effective.

This studio also serves a flashy, modern project that integrates Verizon’s upcoming launch of its 5G network. This network will be integrated into all of Verizon Media’s products to raise their speeds. The RYOT studio is designed to show off what such speeds can do, and to encourage users to consume the studio’s data-intensive content using Verizon devices and apps. 

Important

Verizon is investing heavily in 5G. It aims to be the first company to offer 5G speeds.

Staff Cuts

Like all digital media companies, Verizon Media and Yahoo are currently doing all they can to weather growing instability in the industry. Earlier this year, Verizon Media cut 7% of its workforce.

Key Challenges

As already outlined above, Yahoo and Verizon Media are facing a lot of challenges. Here’s a recap.

• The organizational messiness caused by the simultaneous existence of Oath and Verizon Media have made it difficult for brands like Yahoo to respond to the challenging business environment of digital media.
• Yahoo’s brand pales in comparison to other companies that offer virtually the same products. It is hard to imagine a world in which Yahoo manages to compete with the likes of Google, Facebook, and Comcast much longer.
• Verizon Media has struggled to hold on to the small market share it had in digital ads a few years ago, and unless its new products catch on, it’s likely to lose more.

Reviewed by Somer Anderson
Fact checked by Timothy Li

Goodwill refers to non-physical items that can increase a company’s market valuation. It comes in a variety of forms, including reputation, brand, domain names, intellectual property, commercial secrets, among other intangible assets.

Assigning a numeric value to goodwill can be challenging because these assets are non-quantifiable. However, the need for determining goodwill often arises when one company buys another firm, a subsidiary of another firm, or some intangible aspect of that firm’s business.

Key Takeaways

• Goodwill is an intangible asset, and it comes in a variety of forms, including reputation, brand, domain names, and intellectual property.
• The need for determining goodwill often arises when one company buys another.
• Goodwill is calculated as the difference between the amount of consideration transferred from acquirer to acquiree and net identifiable assets acquired.

History of Goodwill

The concept of goodwill in business affairs goes back at least a century. One of the first definitions of it appeared in “Halsbury’s Laws of England,” a comprehensive encyclopedia that dates from 1907. The current “Halsbury’s” (4th edition, Vol. 35), states that:

“The goodwill of a business is the whole advantage of the reputation and connection with customers together with the circumstances, whether of habit or otherwise, which tend to make that connection permanent. It represents in connection with any business or business product the value of the attraction to the customers which the name and reputation possess.”

In listing goodwill on financial statements today, accountants rely on the more prosaic and limited terms of the International Financial Reporting Standards (IFRS). IAS 38, “Intangible Assets,” does not allow the recognizing of internally created goodwill (in-house-generated brands, mastheads, publishing titles, customer lists, and items similar in substance). The only accepted form of goodwill is the one that is acquired externally, through business combinations, purchases, or acquisitions.

For example, in 2010, Facebook (META), now Meta, bought the domain name fb.com for $8.5 million from the American Farm Bureau Federation. A domain name’s sole value is the name, or (in this case) the initials. That means the entire amount paid for it can be considered goodwill, and Facebook would have recognized it as such on its balance sheet. However, before the acquisition, the American Farm Bureau Federation could not recognize fb.com as goodwill on its balance sheet—goodwill has to spring from an external source (not an internal one).

Calculating Goodwill

According to IFRS 3, “Business Combinations,” goodwill is calculated as the difference between the amount of consideration transferred from acquirer to acquiree and net identifiable assets acquired. The general formula to calculate goodwill under IFRS is:

$begin{aligned} &text{Goodwill} = left(C + NCI + FVright) – NA\ &textbf{where:}\ &C = text{Consideration transferred}\ &NCI = text{Amount of non-controlling interest}\ &FV = text{Fair value of previous equity interests}\ &NA = text{Net identifiable assets} end{aligned}$​Goodwill=(C+NCI+FV)−NAwhere:C=Consideration transferredNCI=Amount of non-controlling interestFV=Fair value of previous equity interestsNA=Net identifiable assets​

Non-Controlling Interests in the Goodwill Calculation

The method to calculate goodwill is straightforward, but challenges can occur when measuring one of the variables: non-controlling interest (NCI). The amount of NCI plays a significant role in the goodwill-calculation formula. A non-controlling interest is a minority ownership position in a company—meaning the position is not substantial enough to exercise control over the company.

Under IFRS 3, there are two methods for measuring non-controlling interest:

1. Fair value or full goodwill method
2. Non-controlling interest’s proportionate share of the acquiree’s net identifiable assets

These two methods can yield different results.

For example, suppose company A Inc. acquires B Inc., agreeing to pay $150 million (the consideration transferred) to obtain a 90% interest in B Inc. The fair value of the non-controlling interest is $16 million. Assume that the fair value of net identifiable assets to be acquired is $140 million and that no previous equity interests exist.

Using the first method of measuring NCI, the amount of the goodwill is $26 million ($150m + $16m – $140m).

Under the second method of measuring the NCI, we take into account the 10% of B Inc. that A Inc. didn’t acquire. As a result, the goodwill value is $24 million ($150m + [140m x 0.1] – $140­m). Thus, there is a difference of $2 million between the amount of the goodwill calculated under the two methods.

Special Considerations

Although goodwill is the premium paid over the fair value of an entity during a transaction, goodwill’s value cannot be sold or bought as an intangible asset by itself. 

It can be challenging to determine the price of goodwill because it is composed of subjective values. Transactions involving goodwill may have a substantial amount of risk that the acquiring company could overvalue the goodwill in the acquisition—and, ultimately, pay too much for the entity being acquired. 

However, despite being intangible, goodwill is quantifiable and is a very important part of a company’s valuation.

What Is the Formula for Calculating Goodwill?

According to IFRS 3, “Business Combinations,” the formula for calculating goodwill is: Goodwill = (Consideration Transferred + Non-Controlling Interest + Fair Value of Previous Equity Interests) – Net Identifiable Assets

How Is Goodwill Different From Other Assets?

Like other assets, goodwill can show up on a company’s balance sheet (but only when two companies complete a merger or acquisition). However, unlike some other assets, goodwill is intangible. It is not a physical asset like buildings or machinery. Another difference is that it has an indefinite life (as long as the company operates). Other assets have a definite useful life, and, as such, they are amortized: A fixed amount is marked down every year, resulting in a simultaneous charge against earnings.

What Is an Intangible Asset?

Goodwill refers to the value of certain non-monetary, non-physical resources, such as customer loyalty and brand reputation. While customer loyalty and brand reputation are certainly intangible, on a company’s balance sheet, an intangible asset refers to something else. An intangible asset is non-physical but identifiable. Examples include a company’s proprietary technology (computer software, etc.), copyrights, patents, licensing agreements, and website domain names.

The Bottom Line

Goodwill is a non-physical item, such as a brand name or intellectual property, that contributes to the value of a company. It is assessed when a firm buys another firm or buys some part of that firm’s business; it cannot be sold, purchased, or transferred separately. The formula for calculating goodwill is: Goodwill = (Consideration Transferred + Non-Controlling Interest + Fair Value of Previous Equity Interests) – Net Identifiable Assets.

It can happen in certain situations

Fact checked by Kirsten Rohrs Schmitt
Reviewed by Margaret James

The relationship between the stock market and your monthly Social Security check should be on your mind. In certain situations, sizable investment gains from the market could decrease your benefits or cause them to become taxable. However, this is rare. Still, careful planning and a thorough understanding of the rules can help ensure that your benefit checks don’t dwindle.

Key Takeaways

• Social Security does not invest any of its funds in the stock market, so stock price fluctuations do not directly impact benefits.
• A booming stock market might increase your personal retirement portfolio’s earnings and make your Social Security benefits taxable, thus reducing them.
• If you begin taking Social Security before your full retirement age and exercise non-qualified employee stock options, your benefits could end up being further reduced.

How Social Security Benefits Are Generated

First, some basics. Your benefits are paid out of the reserves of the Social Security Trust Fund. Money in the trust fund (which actually consists of two funds: the Old-Age and Survivors Insurance Trust Fund and the Disability Insurance Trust Fund) comes from payroll taxes collected from workers and employers (that is, from that category marked “FICA deductions” on your pay stub).

Note

People who are self-employed contribute to Social Security in the form of the self-employment tax.

So your benefits are being funded by contributions from people in the workforce, along with the investment earnings generated on those contributions and federal income taxes.

However, the Social Security Trust Fund has no direct connection to the stock market. Funds left after payment of all benefits are invested in special-issue government bonds on a daily basis. They are similar to U.S. Treasury bonds, except they don’t trade publicly. These interest-bearing bonds are a form of IOU, to be paid from future FICA tax receipts.

Stock-Oriented Scenarios

Your individual Social Security benefits are determined in much the same way that a defined-benefit pension plan works. The amount you receive is based, in part, on how long you worked and how much you earned during your working years. None of the calculations that go into determining your benefits have anything to do with the stock market, bond market, or the prime interest rate, either.

However, there is a way that the stock market could affect your Social Security benefits. That scenario would arise if you opted to start taking those benefits before your full retirement age (e.g., if you were born in 1960 or later, it’s 67) and, at the same time, exercised non-qualified employee stock options (NSOs). Profit generated by the exercise of those options is considered work or earned income. If your total work income for the year, including profit from the sale of NSOs, is more than the legal limit, your benefits will be reduced by $1 for every $2 over the limit.

This only applies to NSOs, however. Profit from exercised stock options bought on the open market or from employer-granted incentive stock options (ISOs) are considered capital gains, not earned income. As such, they do not affect your benefits, as long as you have held those options for at least a year.

Tax Consequences

Once you reach your full retirement age, no amount of income, no matter the source, has an effect on the amount of your Social Security benefits. However, if at any age your total reportable income (including interest payments, dividends, stock options, capital gains, and any other investment-related items) exceeds a certain amount, a portion of your Social Security benefits may be considered taxable. So a great year for the market and your portfolio could effectively reduce your benefits—by imposing taxes on them.

Say you’re a single filer. In 2024, if your combined income is over $34,000, your benefits may be up to 85% taxable. If your combined income is between $25,000 and $34,000, up to 50% of your benefits may be taxable.

Say you file a joint return. In 2024, if your combined income is over $44,000, your benefits may be up to 85% taxable. If your combined income is between $32,000 and $44,000, up to 50% of your benefits may be taxable.

Note: The definition of “combined income” is a bit tricky. In this case, your “combined income” equals:

Your adjusted gross income
+ Nontaxable interest
+ ½ of your Social Security benefits

Other factors, including the age at which you begin receiving benefits, your work history, and any additional income you receive while getting benefits, can directly or indirectly affect your Social Security bottom line. If you receive a government pension, it could result in a reduction of your benefits through either the Government Pension Offset (GPO) or Windfall Elimination Provision (WEP).

Social Security Fairness Act

The Social Security Fairness Act, concerning the Windfall Elimination Provision and Government Pension Offset, was signed into law on Jan. 5, 2025. It eliminates the reduction of Social Security benefits while entitled to public pensions from work not covered by Social Security. The Social Security Administration is evaluating how to implement the act.

The Future of Social Security

Social Security’s exposure (and yours, as a benefits recipient) to the stock market is pretty limited. However, that could change.

The funding crisis that surrounds the Social Security Trust Fund has generated much discussion about finding better ways to finance the program. One suggestion involves investing all or part of the Social Security Trust Fund in the equities markets. Another argues for allowing individual workers to invest all or part of their FICA contributions in instruments of their choosing.

While some observers insist that it’s time for Social Security to invest in the market—or allow employees to do so—and take advantage of the higher rates of return that would be possible, others warn that involvement in the stock market would not make a difference and could, in fact, insert an element of danger in the event that the market collapses or enters a prolonged bear period. Presumably, the trust fund would be a conservative investor, opting for the safest blue-chip stocks, but some degree of risk always exists when investing in equities.

Do Self-Employed People Pay into Social Security?

Yes, self-employed people pay into the Social Security system via the self-employment tax.

What Is the Social Security Administration?

The Social Security Administration is part of the federal government in the United States. It generates Social Security numbers, tracks earnings, and distributes benefits.

What Is the Average Social Security Benefit?

The average Social Security benefit for a retired worker for November 2024 is $1,925.46.

The Bottom Line

If you’re worried whether stock market slumps can affect your Social Security benefits, the short answer is no. For the most part, the stock market has no direct impact on your Social Security benefits.

Should the Social Security Trust Fund begin investing in the stock market (or allow workers to do so with their contributions), there would be no doubt that market results—good or bad—would have a direct effect on Social Security benefits. While there are no definite plans for that to happen, the possibility can serve as a reminder that you should have your own personal retirement accounts in place, and not rely solely on Social Security.

Yes, loaning money to friends and family is still a bad idea. 

That being said, there may be some exceptions. Maybe this person helped you in the past, and you want to repay the favor. Or, you’re fairly certain that the loan will be paid back.

Whatever the reason for the loan, it’s important to set boundaries to help preserve your relationship with this person and eventually get your money back. Before handing your money over, consider the following risks of lending money to friends and family. 

Key Takeaways

• Lending money to friends and family could lead to strained relationships if expectations aren’t clear from the start.
• One significant risk of lending money to loved ones is that you may not get your money back.
• Charging interest on loans, even to family and friends, could mean that you’ll need to pay taxes on the amount you earn. 

You May Not Get Your Money Back

It’s noble to want to help out friends and family, especially if they’re in a financial bind. The truth is that you may never see the money again. Even if you have a formal agreement in place, it could be extremely difficult to recoup your losses. 

Your Relationship Can’t Survive the Strain

Ideally, you’ll have an open and honest conversation with your loved one before lending this person money. You could express your hesitation or fear about getting the money back or hearing what your loved one has to say about their plans to repay the loan. 

If your repayment terms or expectations aren’t clear, it can put a strain on the relationship. Or, if the loan isn’t paid back on time (or at all), it could lead to further resentment. 

You Could Be On The Hook For Taxes

If you decide to charge interest, any amount you earn from lending out money may count as ordinary income in the eyes of the IRS. Not setting aside money from the interest you earn could lead to an unpleasant surprise come tax season.  

Fast Fact

If you lend over $18,000 to a loved one, you may need to file a gift tax return if the loan is interest-free. 

You Could Be Expected to Constantly Help Out Others

In your mind, you’re doing a one-off favor for a close friend who needed some extra cash during the holiday season. You don’t want them to struggle and can afford to lend them the money.

Unfortunately, other friends or family members may want to take advantage of your generous nature and expect you to help them. Or, the same person may ask you for additional loans. To prevent friends and loved ones from constantly believing you’ll open your wallet for them, carefully consider what boundaries you’ll set before lending any money. 

Important

Find out more on this topic with the do’s and don’ts of lending to friends or family.

The Bottom Line

Even though you may want to help, you must think carefully before lending money to friends and family. There is the potential that you may not see the money ever again, be asked to lend money repeatedly, and end up with a lot of resentment toward people you are close to. If you decide to grant a loan, ensure you are explicit in your expectations and whether you can truly afford to part with the funds. 

Term life insurance pays your beneficiaries a death benefit if you die during the policy’s specified term. The death benefit can range significantly in size from policy to policy, but it’s possible to buy coverage worth millions of dollars. That money typically gets paid to beneficiaries tax-free and outside of probate, compounding the reward for your loved ones when they need it most.

Yet most term life insurance policies never pay out. That’s because the term usually lasts between 10 and 30 years, and most people outlive their term life coverage, while others stop paying their premiums and let their policies lapse.

While term life insurance coverage can be affordable, especially if you buy early, you won’t get your premiums back unless you also shelled out for a return-of-premium rider to your policy. So is term life insurance worth it or not? Let’s review.

Key Takeaways

• Term life insurance could pay out a substantial sum of money, but only if you die while the policy is still active.
• Although you’re likely to outlive your term life coverage, the premiums are often very low compared to the potential payout and the peace of mind that could give your loved ones. 
• You may opt to extend or convert your coverage to a permanent policy at the end of the term.

How Often Do Term Policies Pay Out?

A 1993 study from Penn State University found that life insurers pay a death benefit to beneficiaries for just 1% of term life policies. This stat appears frequently in books and several places online, but we weren’t able to independently verify it.

The best recent data comes from the American Council of Life Insurers, which releases an annual fact book of industry trends. According to the most recent edition, there were 9.6 million individual life insurance policies purchased in 2023, for a cumulative total of 134 million individual life insurance policies in force. In the same year, 8.5% of individual life insurance policies lapsed or were surrendered, while 2.7 million individual policies resulted in a death benefit payment to beneficiaries. This means 2% of all in-force policies paid out. 

Note that this data does not say whether these were term or permanent life insurance policies; we contacted the American Council of Life Insurers and LIMRA, two organizations representing the life insurance industry, and neither could provide current data on term life insurance payouts.

What Makes Term Life Insurance Worth It?

Despite this low payout rate, term life insurance can be a solid return on your investment, especially if you purchase it when you’re young and healthy. A 30-year term policy with a $500,000 benefit could cost as little as $25 to $29 per month for a 30-year-old in good health. If the premiums are level, meaning they don’t change over time, that means you could pay as little as $9,000 over the entire 30-year term. That’s a fraction of what your beneficiaries could receive if you die during the term.

“The death benefit from an appropriate level of coverage can provide enough for years of financial support for a family,” said Josh Anderson, president and CEO of Eagle Legacy & Financial and an independent life insurance agent. “This money can buy the time needed for a surviving spouse and children to make adjustments to lifestyle, obtain educations, and start new careers.”

A 30-year term policy also dovetails with other significant expenses and debts. Your beneficiaries may rely on that money to continue paying the mortgage or to cover college tuition, student loans, medical debt, or even your funeral expenses (which can push five figures). At the very least, the death benefit could provide a comfortable nest egg to your loved ones in lieu of, or in addition to, your retirement savings.

It’s also important to remember you’re paying for coverage in case the worst happens, not a guaranteed payout. Your car insurance isn’t a waste of money, even if you never get into an accident.

What If I’m Still Worried About Outliving My Policy?

“Many people will look for a new policy to replace their current policy as they near the end of the term,” said Anderson. “For some though, age or health may be considerations as to whether a new policy is affordable or whether they can qualify.”

Conversion involves changing your term life insurance policy into some form of permanent life insurance policy, such as whole life insurance or universal life insurance, without having to take a health exam. These policies will provide you with coverage for the rest of your life, and getting one without a health exam when you’re 20 or 30 years older than when you first got a term policy could be a real benefit.

Important

Permanent life insurance costs significantly more than term life insurance for the same level of benefit. But it includes a cash value component that grows over time and can be tapped while you’re alive.

Another option is extending your term coverage, which some life insurers allow even without forcing you to undergo another medical exam. However, as with permanent life insurance conversion, your premiums are likely to increase. 

“Though the premium will be higher,” Anderson said, “this may still offer a competitive reasonable cost for the insured depending upon their age.”

Additionally, considering how much you’ll save from a term life policy compared to costlier permanent life insurance, during the term you could invest the difference in an index fund and help build a nest egg.

The Bottom Line

Term life insurance can help protect your family from the risk of surviving without your income. That’s the benefit of your policy. Even if it never pays out, you’ve reduced the financial risk to your loved ones.

Fact checked by Skylar Clarine
Reviewed by Lea D. Uradu

If you’re one of the many Americans who are currently sitting on an ocean of untapped home equity, you’re likely getting advertisements encouraging you to take out a home equity loan. Is one a good idea for you? Although the benefits of a home equity loan depend on your personal finances, taking out a home equity loan can benefit you if you use the funds to improve your home. On the other hand, using the money to fund a trip, buy a car, or spend the money on something other than your home isn’t the best use of the loan.

Key Takeaways

• A home equity loan allows you to borrow a lump sum of money against your home’s equity and pay it back over time with fixed monthly payments.
• A home equity loan is a good idea when used to increase your home’s value.
• A home equity loan is a bad idea when used to spend frivolously.

How Home Equity Loans Work

A home equity loan is a loan that allows you to take out a one-time lump sum and pay it back at a fixed interest rate with equal monthly payments over an agreed-upon time frame. Home equity loans offer lower interest rates than other forms of unsecured debt, such as credit cards and personal loans, because they use the equity you have in your home as collateral for the loan. 

Home equity loans, home equity lines of credit (HELOCs), reverse mortgages, and cash-out refinances are all ways to get cash by borrowing against your home. By using your home’s equity in this way, you are taking on two main risks:

• If you can’t afford to pay your loan(s) back, you could lose your home in foreclosure.
• If your home’s value decreases, you could become underwater on your loan(s). In that case, you won’t be able to sell your home without taking a financial loss.

When a Home Equity Loan Is a Good Idea

A home equity loan can be a good idea when used to fund a project that will directly increase your home’s equity. Tapping into your home’s equity through a loan decreases the equity you have in your home until the loan is paid back. Using the loan to invest in a project that will increase your home’s value can help mitigate the loan risk. 

A home equity loan is a good alternative to a reverse mortgage because it has much lower fees. However, it should still be used only when financing a project that will increase your home’s value.

Using a home equity loan to consolidate high-interest debt can be a good idea as long as you have the discipline and changed circumstances to pay off the home equity loan on time. Make sure that you are addressing any underlying habits that could have caused the high balance of debt, like overspending simultaneously, so you don’t end up stuck in a debt spiral.

When a Home Equity Loan Is a Bad Idea

In general, a home equity loan is a bad idea when it is used for anything other than something that will directly increase your home’s value. A home equity loan is a particularly bad idea when used frivolously. Don’t use a home equity loan to fund a lifestyle that your income can’t sustain. If you can’t afford luxury dinners, cars, and vacations on your income, don’t erode your home’s equity to temporarily live that lifestyle.

Is a Home Equity Loan or a Home Equity Line of Credit (HELOC) a Better Idea?

Both a home equity loan and a home equity line of credit (HELOC) borrow against your home’s equity and carry the same risks. A HELOC has a variable interest rate, whereas a home equity loan almost always has a fixed interest rate. When interest rates are rising, it’s better to take out a home equity loan than to carry a high balance on a HELOC. A HELOC can be a better idea for flexibility, particularly for real estate investors who will draw down and pay off the HELOC repeatedly over the course of purchasing multiple properties.

Should You Take Out a Home Equity Loan To Get a Tax Deduction?

No, you should not take out a home equity loan just for the tax deduction. If you already have a home equity loan, you may be able to get a tax deduction for the interest portion of the loan as long as you use the loan proceeds to “buy, build or substantially improve” the home that secures the loan. Keep in mind that this only benefits you if you itemize your tax deductions. If you take the standard deduction, you’ll see no benefit to having a home equity loan for tax purposes.

Is a Home Equity Loan a Good Hedge Against Job Loss?

No. A home equity loan requires you to make repayments shortly after taking one out. Thus, tapping your home’s equity to get cash before a potential layoff has limited utility.

What Can Home Equity Loan Proceeds Be Used For?

You can use your home equity loan proceeds on whatever you want. Nothing but your own common sense is technically stopping you from putting the whole thing on black at your local roulette table. This is why it’s vital to understand the risks and take out a home equity loan conscientiously.

The Bottom Line

Like many other loan products, a home equity loan can be a good idea in some circumstances and a terrible idea in others. Understand the risks and consider whether risking your home is worth whatever you’re taking out the loan for. In general, you should only consider a home equity loan for something that can increase your home’s value.

Reviewed by Thomas J. Catalano
Fact checked by Suzanne Kvilhaug

The income you receive from your 401(k) or other qualified retirement plan doesn’t affect the amount of the Social Security retirement benefit you receive each month, but does affect whether your benefits are taxable. Certain thresholds determine if your income, including your 401(k) distributions, is taxable.

Key Takeaways

• Withdrawals from a 401(k) can begin when an account holder turns 59½ years old.
• Social Security retirement benefits are not affected by 401(k) plans.
• Distributions from a 401(k) may increase your total annual income, affecting the tax on Social Security benefits.

Social Security vs. 401(k) Income

Social Security benefits are determined by the amount of money earned during an individual’s working years and paid Social Security taxes. Social Security taxes the full amount of your compensation in the year you earned it up to a predetermined annual limit established by the Internal Revenue Service (IRS). For 2024, it’s $168,600.

401(k) contributions and withdrawals do not affect Social Security benefits. Contributions to a 401(k) are made with pretax dollars but are subject to Social Security and Medicare taxes. Contributions to a Roth 401(k) are subject to income taxes. You’ll pay your income tax on non-Roth 401(k) distributions in retirement.

Important

Income from Social Security may increase annually if the Social Security Administration approves a cost of living adjustment (COLA), commonly based on inflation. For 2025, recipients can expect a 2.5% increase.

The Tax Impact of 401(k) Savings

Individuals may have to pay income tax on some of their Social Security benefits if their annual combined income—including those 401(k) distributions—exceeds a certain amount. Taxes are not levied on individuals whose total income is less than $25,000 or $32,000 if filing jointly with a spouse.

You may be required to pay taxes on up to 50% of your benefits if your income is between $25,000 and $34,000 or between $32,000 and $44,000 if filing jointly. Up to 85% of your benefits may be taxable if you’re single and earn more than $34,000 or married earning more than $44,000. According to the Social Security Administration (SSA), combined income equals the sum of:

• Adjusted gross income (AGI), which includes earned wages and withdrawals from any retirement savings accounts, like individual retirement accounts (IRAs) and 401(k)s
• Any nontaxable interest
• One-half of your Social Security benefits

Determining Social Security Benefits

The SSA calculates an average monthly benefit amount based on your average income and the years you’re expected to live. You can begin receiving Social Security benefits as early as age 62, but the benefit amount is reduced for each month you collect before you reach your full retirement age.

The full retirement age is 66 if you were born between 1943 and 1954. It increases from age 66 by two months each year until age 67 if you were born between 1955 and 1960. The full retirement age is 67 if you were born in 1960 or later.

In 2024, the maximum monthly benefit at full retirement age is $3,822. Those who wait until age 70 can collect a benefit of up to $4,873.

Visit the SSA website for an estimate of benefits using the online calculator.

Other Retirement Income

Other types of retirement income can affect your benefit amount even if you collect benefits on your spouse’s account. Your benefits may be reduced due to income you receive from a government pension or another job for which your earnings weren’t subject to Social Security taxes. This rule primarily affects people working in state or local government positions, the federal civil service, or those employed with a foreign company.

Social Security benefits will be reduced by two-thirds of a pension from a government position not subject to Social Security taxes. This rule is referred to as the Government Pension Offset. For example, for those eligible to receive $1,200 in Social Security but who receive $900 from a government pension, benefits will be reduced by $600 (2/3 × $900). Your total monthly income of $2,100 ($1,200 + $900) would drop to $1,500 ($600 + $900).

This Windfall Elimination Provision (WEP) reduces the unfair advantage given to those who receive benefits on their account and receive income from a pension based on earnings for which they did not pay Social Security taxes. The WEP reduces Social Security benefits by a certain factor in these cases, depending on the age and birth date of the applicant. But it doesn’t apply if you also have 30 or more years of earnings on which you did pay Social Security taxes.

Social Security Fairness Act

The Social Security Fairness Act, concerning the Windfall Elimination Provision and Government Pension Offset, was signed into law on Jan. 5, 2025. It eliminates the reduction of Social Security benefits while entitled to public pensions from work not covered by Social Security. The Social Security Administration is evaluating how to implement the act.

Are 401(k) Withdrawals Considered Income for Social Security Purposes?

Social Security only considers earned income, such as a salary or wages from a job or self-employment. Withdrawals will be included in income and determine whether your Social Security benefits are taxable and, if so, how much.

Will Working in Retirement Reduce Social Security Benefits?

The Social Security Administration (SSA) will withhold $1 in benefits for every $3 you earn above the annual limit in the year you reach full retirement age. This limit is $59,520 in 2024. The SSA will instead deduct $1 from your benefit payments for every $2 you earn above the annual limit of $22,320 in 2024 if you’re under full retirement age. There is no withholding after you reach full retirement age.

Should I Use My 401(k) Before I Take Social Security?

You must start withdrawals from your 401(k) after age 72 (or age 73 if you turned 72 after Dec. 31, 2022), but you can start withdrawing from your 401(k) plan as early as age 59½. That’s sooner than you’re eligible to begin receiving Social Security benefits. You may want to defer withdrawing from either to maximize retirement income if you still work.

The Bottom Line

Income from a 401(k) doesn’t affect the amount of your Social Security benefits, but it can boost your annual income to a point where those benefits will be taxed. This can be tricky for someone required to withdraw from their 401(k) and collect Social Security. Individuals and couples must factor in tax liabilities when planning for retirement or deciding how large of a 401(k) distribution they should take.

Quarterly earnings calls have long been one of Wall Street’s driest rituals—hours of executives offering pablum about “executing on our strategic initiatives” and “driving operational excellence” before they field questions from analysts. Researchers have even studied whether there’s a method to CEO mumbling and the lousy dad jokes company managers fruitlessly offer to break up the general tedium. One thing all agree on: they’re boring.

So do you have to listen to them? While these quarterly forums often dive into numbing technical details, modern tools make it easy to zero in on the key intel you need. In addition, earnings calls have at times broken away from the dullness they’re known for: Nvidia Corp. (NVDA) investors have packed watch parties that rival those for sporting events, and there’s a growing list of CEOs berating analysts in heated exchanges.

Here’s what you need to know about making the most of earnings calls—without surrendering hours of your time.

Key Takeaways

• Earnings calls provide important context and forward-looking information not available in written reports alone.
• Management’s tone and confidence can reveal crucial insights about performance and prospects.
• Individual investors often get better value from reading call summaries and expert analysis than listening to full calls.

Smart Ways To Track Earnings Calls

You can now skip the live calls entirely using these tools:

• Earnings call transcripts: Many services online offer free transcripts shortly after calls end. You can search the transcripts for “guidance,” “outlook,” “challenges,” or other topics you’re tracking.
• Expert analysis: For larger firms, the financial media typically publish key takeaways within hours, highlighting the most important revelations.

What Really Matters in These Calls?

The most revealing parts aren’t about the raw numbers—they’re provided in PDFs anyway—but from how executives present them. You don’t need an accounting license to spot the following:

• Changes in key metrics: When companies suddenly stop highlighting previously important performance measures or shift to new ones, this often signals problems. For example, in 2021, Meta Platforms Inc. (META) pivoted from discussing user growth metrics to measures of metaverse investments. Then, in another shift in 2023, Meta wasn’t discussing the metaverse at all, as losses had mounted into the tens of billions.
• Forward guidance: Listen for whether they narrow ranges, become more conservative, or drop, giving specific projections entirely.
• Q&A session: This is generally where the most action is. Sharp or defensive responses can reveal the company’s pressure points.
• Strategic shifts: You’ll need to read between the lines when the topic turns to changes in the market, new initiatives, or competitive pressures. You won’t hear “our core business is tanking”—instead, executives speak about “challenging market conditions” (i.e., sales are down) or “streamlining operations” (i.e., layoffs are coming).

Infamous Earnings Calls

The most notorious earnings calls might be from March and June 2008. In the March call, Lehman Brothers‘ CFO used “great” 14 times while assuring investors amid the growing subprime mortgage crisis that it would barely impact the firm’s earnings. Three months later, after another $2.8 billion in losses, she returned to insist the firm’s business was strong. The CFO was fired a month later, and by September, the once high-flying investment bank was out of business.

How Do Earnings Calls Affect the Market?

Earnings calls can trigger significant market moves, often in unexpected ways. A company might report strong numbers but see its stock decline if executives sounded uncertain during the Q&A. Meanwhile, investors might overlook mediocre results if management convincingly explains its strategy for addressing challenges.

Consider Nvidia’s recent earnings calls—they’ve become market events that rival major U.S. Federal Reserve announcements in financial media coverage, potentially triggering stock values shooting up or down by hundreds of billions.

The Bottom Line

While you don’t need to clear your calendar for every earnings call, these quarterly check-ins offer valuable information on your investments. The good news? You can skip the live event and still get what matters through transcripts, media summaries, and analyst reports.

During his campaign, President-elect Donald Trump proposed abolishing the United States Department of Education. If the Education Department was shut down, then the management of federal student loans and other programs could fall to different government departments or even a government corporation. If the latter came to pass, it could also mean that certain borrower protections would cease to exist.

Key Takeaways

• While on the campaign trail, President-elect Donald Trump repeatedly proposed closing the U.S. Department of Education.
• Without the Education Department, other government departments or a government corporation would likely be placed in charge of federal student programs.
• If a government corporation becomes responsible for managing federal student loans, then there’s a good chance that certain borrower protections would no longer be available.

How Federal Education Programs Would Chang

Even if the Department of Education is shuttered, the federal government would still play much the same role in the education system. In all likelihood, its operations would simply be passed to one or more of the other government agencies. The Department of Justice, Department of Labor, or Treasury Department have each been previously suggested as candidates for taking on some of the Department of Education’s responsibilities.

This is almost exactly what Project 2025, a conservative policy written by former members of and collaborators with the first Trump administration, proposes. While Trump’s own Agenda47 doesn’t offer a concrete plan for replacing the Education Department, this document outlines how each of the Department of Education’s offices and programs could be redistributed to other agencies.

Note

Trump has publicly denied having any knowledge of Project 2025, calling the Heritage Foundation’s (the think tank behind Project 2025) plans “absolutely ridiculous and abysmal.” 

Despite this, Trump previously said during a conference the Heritage Foundation is “going to lay the groundwork and detail plans for exactly what our movement will do.” Additionally, he’s nominated several people involved in Project 2025 for positions in his second administration, including Russell Vought, Stephen Miller, Karoline Leavitt, Brendan Carr, and Tom Homan.

One of the more notable recommendations is spinning off the Office of Federal Student Aid’s obligations to a new government corporation. Federal student loans would be overseen by the Treasury, which would also manage collections and defaults. This new federal student loan authority would be tasked with managing the loan portfolio, administering loan applications and disbursements, issuing regulations, etc.

How Borrower Protections Would Change

A government corporation is an agency that’s owned by the government but operates like a private business. If student loans end up being managed by an entity that’s essentially a for-profit, private lender, then there’s a chance federal student loans may become more like their private counterparts.

Private student loans usually charge higher interest rates, for example, and they also tend to have fewer borrower protections. Federal student loans offer several different student debt forgiveness options, including Public Service Loan Forgiveness (PSLF) and income-driven repayment (IDR) plans.

Private student loans don’t typically offer debt forgiveness, and they don’t always allow for deferment or forbearance if you’re having trouble paying back your loans. As a result, this puts borrowers at a greater risk of becoming delinquent or defaulting on their loans.

The Bottom Line

The Department of Education can’t be shut down without a 60-vote supermajority from the Senate. During the 2024 election, Republicans gained four extra seats and now hold a 53-47 majority. That would mean every Republican senator as well as at least seven from other parties would be needed to abolish the Education Department.

While the Department of Education may not actually be going anywhere, the President can likely still reassign enough of the department’s main responsibilities so as to effectively render it defunct. As we wait to see how the next four years shake out for the Education Department, federal student loan borrowers would be wise to stay on top of their student loan payments and try to repay their debt as fast as they feasibly can.