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The IRS has released an “important update” for Direct File, the agency’s free tax filing program.
Direct File users can now automatically import key return verification details from the IRS, which has been the top mistake before filing, a Treasury official said.
The pilot is available for certain taxpayers in 12 states and will remain open for rejected returns until April 20.

D3sign | Moment | Getty Images

With one week until the April 15 federal tax deadline, the IRS has released an “important update” for Direct File, the agency’s free tax filing program.
Since March 12, the pilot program has been fully open for certain filers in 12 states, and Direct File now allows users to import key details needed to verify returns before filing.

When e-filing your taxes, you validate your return before filing by inputting the previous year’s adjusted gross income or the prior year’s temporary pin. Tax software typically adds this info for returning customers, but first-time users must add it manually.
This key step has been the main issue preventing Direct File returns from being successfully filed, according to a Treasury official.
But as of Monday, Direct File users can now import these verification details from the IRS, which could minimize the common error. Taxpayers can only access details from their own IRS account, which has identity verification, a Treasury official said.
More from Personal Finance:IRS free tax filing program launches in 12 pilot states19 million people may qualify for free tax prep through the IRSHow to pick the best free tax filing option this season”This important update will allow Direct File users to take advantage of information the IRS already has to simplify the filing process even further,” said Bridget Roberts, who leads Direct File at the IRS. 
Direct File will remain open for rejected returns until April 20, a Treasury official said.

Who qualifies for the Direct File pilot

Another common reason for abandoned Direct File returns has been tax situations not covered by the pilot, such as Forms 1099, according to a Treasury official.
“Direct File eligibility is limited to those with simple tax returns this filing season,” Deputy Secretary of the Treasury Wally Adeyemo said during a press call in March. “But a large percentage of Americans qualify.”
The IRS Direct File pilot states include Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington and Wyoming.

The pilot will only accept Form W-2 wages, Social Security retirement income, unemployment earnings and interest of $1,500 or less. This excludes filers with contract income reported via Form 1099-NEC, gig economy workers or self-employed filers.
To qualify, you must claim the standard deduction, which is $13,850 for single filers and $27,700 for married couples filing jointly for 2023.
Direct File only accepts a few credits: the earned income tax credit, child tax credit and credit for other dependents. The software also accepts deductions for student loan interest and educator expenses.
In March, the Treasury Department estimated that one-third of federal income tax returns could use Direct File this season and 19 million taxpayers may currently be eligible.
The agency hopes to see 100,000 filings this season, a senior administrative official said in March. That works out to roughly 0.5% of those eligible filers. Roughly 60,000 taxpayers have used Direct File so far and the agency expects volume to increase ahead of the deadline, according to a Treasury official.

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President Joe Biden’s new plan to “cancel runaway interest” on student loans may reach as many as 25 million borrowers.
It is the provision that might prove to be the most wide-reaching of the president’s revised relief program, which he hopes will stand up to any legal challenges this time.

U.S. President Joe Biden speaks as he announces a new plan for federal student loan relief during a visit to Madison Area Technical College Truax Campus, in Madison, Wisconsin, U.S, April 8, 2024. 
Kevin Lamarque | Reuters

Interest provision may erase up to $20,000 per borrower

Consumer advocates have long criticized the fact that interest rates on federal student loans may exceed 8%, which can make it tough for borrowers who fall behind or are on certain payment plans to reduce their balances.
More than 25 million federal student borrowers owe more than they originally borrowed, according to the Biden administration.

It estimates that, if its new plan is enacted as proposed, borrowers will get up to $20,000 of unpaid interest on their federal student debt forgiven, regardless of their income.

Certain low- and middle-income borrowers may benefit even more.
Single people who earn $120,000 or less, and married borrowers making $240,000 or under, could have the entire amount of interest that has accrued on their debt since they entered repayment canceled under Biden’s plan.
Borrowers would need to be enrolled in an income-driven repayment plan to qualify but shouldn’t have to apply for the relief.
“Student debt interest capitalization has been keeping families from accessing their version of the American Dream,” said Jaylon Herbin, director of federal campaigns at the Center for Responsible Lending. “Erasing that debt will lessen the burden of student loan debt on millions of borrowers and allow them to pay off their loans in a timely manner.”

Who may benefit from new forgiveness plan

In addition to the cancellation of interest, Biden’s new plan is also expected to forgive the debt of certain groups of borrowers, including those who:

Are already eligible for debt cancellation under an existing government program but haven’t yet applied
Have been in repayment for 20 years or longer on their undergraduate loans, or over 25 years on their graduate loans
Attended schools of questionable value
Are experiencing financial hardship

It’s not entirely clear yet how financial hardship will be defined, but it could include those burdened by medical debt or high child care expenses, the Biden administration said.

Biden originally attempted to cancel people’s student debt through executive action, but he’s now turned to the rulemaking process. The next step in that procedure is for the Biden administration to issue a proposed rule on its plan, which will be followed by a public comment period.
The president hopes to begin forgiving student debt before the November election. More

YOUR GUIDE TO NAVIGATING YOUR FINANCIAL FUTURE

President Joe Biden announced a new student loan forgiveness plan Monday, which could benefit as many as 30 million people, according to estimates.
Biden’s Plan B targets five specific groups of borrowers.
Here’s who could qualify for the new relief effort.

1. Borrowers with ‘runaway interest’

More than 25 million borrowers owe more than they originally borrowed in federal student loans because of accrued interest charges, according to the Biden administration.
As part of this plan, those borrowers could get up to $20,000 of unpaid interest on their debt forgiven, regardless of income. Certain low- and middle-income borrowers, if they’re enrolled in an income-driven repayment plan, could have the entire interest balance that has accrued on their federal loan debt since they entered repayment canceled.
Anyone enrolled in the Saving on a Valuable Education Plan, or SAVE, or any other income-driven repayment plan would be eligible without having to apply.

As part of its National Financial Literacy Month efforts, CNBC will be featuring stories throughout the month dedicated to helping people manage, grow and protect their money so they can truly live ambitiously.

2. Borrowers eligible for forgiveness programs, who haven’t applied

Consumer advocates and borrowers have complained that the government’s debt forgiveness programs can be hard to know about and to access.

Biden’s new plan is also expected to cancel debt for borrowers who are otherwise eligible for relief through Public Service Loan Forgiveness or SAVE or other income-driven repayment plans, but have not successfully applied.
The Department of Education will review the accounts of borrowers to identify who could be eligible for this type of relief, which would go into effect automatically, the administration said.

3. Borrowers who entered repayment over 20 years ago

Another 2.5 million borrowers would benefit from the forgiveness of student loans that have been held for two decades or longer.
Borrowers with undergraduate debt would qualify for forgiveness if they first entered repayment on or before July 1, 2005, and borrowers with any graduate school debt would qualify if they first entered repayment on or before July 1, 2000, the administration said. Both direct loans and consolidated loans are eligible for relief. 

4. Borrowers who enrolled in ‘low-value’ colleges

Graduates with loans from “low-value” institutions or programs would also be eligible for loan forgiveness.
Under this part of the plan, borrowers who attended institutions or programs that closed or “failed to provide sufficient value” — meaning that graduates were left no better off than someone with a high school diploma — could apply for relief.
“Low-value” institutions are generally colleges that lost their eligibility to participate in the Federal Student Aid program or were denied recertification because they cheated or took advantage of students, according to the Biden administration.
Along these same guidelines, the Education Department has already canceled the student loans of more than 1 million students who attended certain for-profit schools, including Corinthian Colleges and ITT Technical Institute.

5.  Borrowers experiencing ‘hardship’

While harder to quantify, “millions of borrowers could be eligible for relief if they are experiencing hardship in their daily lives that prevent them from fully paying back their loans now or in the future,” the administration said. This piece of the plan would cancel student debt for borrowers who are at high risk of defaulting on their student loans or families burdened with other expenses like medical debt or child care.
With higher debt burdens, Black and Latino borrowers will benefit disproportionately from this relief, the White House also said.
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President Joe Biden will announce on Monday the details of his new student loan forgiveness plan, which could affect tens of millions of Americans.

Immediately after the Supreme Court rejected Biden’s first attempt at wide-scale education debt cancellation, the president said he would seek to forgive the loans another way.
Despite its smaller scope than Biden’s first education debt relief plan, this new aid package could still lead to at least partial forgiveness for 25 million Americans, the Biden administration said.
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The plan, if enacted as proposed, would cancel up to $20,000 in unpaid interest for millions of borrowers.
In addition, the program is expected to forgive the debt of certain groups of borrowers, including those who:

Are already eligible for debt cancellation under an existing government program but have not yet applied
Have been in repayment for 20 years or longer on their undergraduate loans, or more than 25 years on their graduate loans
Attended schools of questionable value
Are experiencing financial hardship

The U.S. Department of Education could begin forgiving the debt as soon as this fall.

Student loan forgiveness and the presidential election

Biden wants to make good on his 2020 campaign promise to forgive student debt ahead of the November election.
Almost half of voters in a recent survey, or 48%, said canceling student loan debt is an important issue to them in the 2024 presidential and congressional elections. SocialSphere, a research and consulting firm, polled 3,812 registered voters, including 2,601 Gen Z and millennial respondents, in mid-March.
Forgiving student debt could especially help Biden with young voters, a demographic he has been struggling with. About 70% of Gen Z respondents said student debt cancellation was important to them in the election, that same survey found. More than half, or 53%, of respondents in that generation said they or someone in their household has student debt.

The issue is a chance for Biden to differentiate himself from his likely Republican opponent Donald Trump, who has a record of opposing debt relief for students.
While in office, the former president called for the elimination of the popular Public Service Loan Forgiveness program, signed into law by President George W. Bush in 2007. Trump also sided with the Supreme Court in its ruling to strike down Biden’s plan.
“Today, the Supreme Court also ruled that President Biden cannot wipe out hundreds of billions, perhaps trillions of dollars, in student loan debt, which would have been very unfair to the millions and millions of people who paid their debt through hard work and diligence; very unfair,” Trump said at a campaign event in June 2023.  More

YOUR GUIDE TO NAVIGATING YOUR FINANCIAL FUTURE

Problems with the new FAFSA have delayed financial aid award letters, making it harder for students to make informed decisions about next year ahead of enrollment deadlines.
In the meantime, applying for more private scholarships may help ease the burden of the cost of college.
This could also be an opportunity for college hopefuls to weigh their options before factoring in aid, according to Nancy Goodman, founder of College Money Matters.

Problems with the new Free Application for Federal Student Aid have left many students in a bind.
In an early April update, the U.S. Department of Education said the delivery of some FAFSA applications would be further delayed due to ongoing issues with applicants’ tax data.  

“We are working hard to address these challenges and ensure schools have the information needed to package and make aid offers as quickly as possible,” Rich Cordray, chief operating officer for the Education Department’s Office of Federal Student Aid, said in a statement. 
However, these latest setbacks may mean it will take colleges even longer to get financial aid award letters to students, shortening the time those college hopefuls have to make informed enrollment decisions about next year.

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“Continually taking two steps forward and one giant step back is not a sustainable pathway toward getting financial aid offers out to students and families,” said Justin Draeger, president of the National Association of Student Financial Aid Administrators. 
In ordinary years, financial aid award letters are sent around the same time as admission letters, meaning students have several weeks to compare offers ahead of National College Decision Day on May 1, the deadline to decide on a college for most admitted students.
Higher education already costs more than most families can afford, and college costs are still rising. Tuition and fees, plus room and board, for a four-year private college averaged $56,190 in the 2023-2024 school year; at four-year, in-state public colleges, it was $24,030 per year, according to College Board.

Arrows pointing outwards

For most students and their families, the college they choose hinges on the amount of financial aid offered and the breakdown between grants, scholarships, work-study opportunities and student loans.
“For many of our students, it’s less about comparing offers and more about, ‘Can I go at all?'” said Charles Welch, president and CEO of the American Association of State Colleges and Universities.
To that end, the AASCU is encouraging colleges and universities to extend their decision deadlines to give students and families more time to assess their financial aid picture.
Some schools have already postponed those enrollment deadlines to May 15 or later.
“Our number one concern is making sure we give students every opportunity they can to make determinations about financial eligibility,” Welch said.

FAFSA delays don’t have to mean rushed decisions

This could also be an opportunity to weigh your options before factoring in aid, according to Nancy Goodman, founder of College Money Matters, a nonprofit focused on helping high school students and their families make informed decisions about paying for college.
“It’s not unexpected that people would feel the FAFSA delays are forcing them into a rushed decision about something that has a major financial impact on their lives,” she said. “But this waiting time can be an opportunity, because it gives students and their families the chance to step back and consider their options from a more clear, objective and unhurried point of view.”
Consider also your choice of major and future earnings potential, Goodman advised. Often, a good rule of thumb is not to borrow more than you expect to earn as a starting salary, other experts also say.
“This time is best used to objectively evaluate each school on the basis of how well they serve the student’s future — as opposed to how much aid they may offer in student loans,” Goodman said.
To determine which schools may be the more affordable options, the U.S. Department of Education’s college scorecard and each school’s net price calculator can help.

Tap private scholarships

In the meantime, students should also be exploring other sources of merit-based aid.
“I recommend being laser focused on applying for scholarships,” said James Lewis, co-founder of the National Society of High School Scholars.
In fact, there are more than 1.7 million private scholarships and fellowships available, often funded by foundations, corporations and other independent organizations, with a total value of more than $7.4 billion, Lewis explained.

Many don’t require a completed FAFSA, Lewis added, and there are free resources that can match you to available scholarships based on your skills and interests.
“There are students who have paid for their entire college education through scholarships, it’s just dependent on the amount of effort and time put in,” Lewis said.
Check with the college or ask your high school counselor about opportunities. You can also search websites like Scholarships.com and College Board.
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President Joe Biden will announce on Monday the details of his revised student loan forgiveness plan.
Although Biden’s Plan B will be narrower than his original effort, tens of millions of borrowers stand to benefit.

President Joe Biden on Feb. 21, 2024, visiting a library in Culver City, California.
Irfan Khan | Los Angeles Times | Getty Images

President Joe Biden will announce on Monday a new, sweeping student loan forgiveness plan, which could benefit tens of millions of Americans.
Biden will share the details of the aid package at an event in Madison, Wisconsin.

The news comes less than a year after the Supreme Court rejected his first attempt to cancel up to $20,000 in student debt per borrower. The conservative justices ruled that that effort was unconstitutional in June.
Although Biden’s Plan B for student loan forgiveness will be narrower than his initial effort, tens of millions of borrowers may still see their balances erased or lowered if the program survives legal challenges this time.
“These historic steps reflect President Biden’s determination that we cannot allow student debt to leave students worse off than before they went to college,” U.S. Undersecretary of Education James Kvaal said in a statement.
Kvaal added that Biden had directed the department “to complete these programs as quickly as possible, and we are going to do just that.”

Who may benefit from new forgiveness plan

Biden’s revised plan targets specific borrowers, including those who:

Are already eligible for debt cancellation under an existing government program but haven’t applied
Have been in repayment for 20 years or longer on their undergraduate loans, or over 25 years on their graduate loans
Attended schools of questionable value
Are experiencing financial hardship

It’s not entirely clear yet how financial hardship will be defined, but it could include those burdened by medical debt or high child care expenses, the Biden administration said.

The president is also expected to discuss a plan to “cancel runaway interest” for millions of borrowers.
Consumer advocates have long criticized the fact that interest rates on federal student loans may exceed 8%, which can make it tough for borrowers who fall behind or are on certain payment plans to reduce their balances. Some end up owing more than they originally borrowed, even after years of repayment.
The Biden administration estimates that, if its new plan is enacted as proposed, borrowers will get up to $20,000 of unpaid interest on their federal student debt forgiven, regardless of their income. Certain low- and middle-income borrowers could have the entire amount of interest that has accrued on their debt since they entered repayment canceled.

A narrower aid package Biden hopes will survive

The Biden administration believes its updated plan will survive legal challenges this time for several reasons.
In addition to the fact that this effort is a more targeted aid program, the Education Dept. is also using a different law — the Higher Education Act — as its legal justification. Biden’s initial forgiveness effort was based on the Heroes Act of 2003.
The HEA was signed into law by President Lyndon B. Johnson in 1965, and allows the education secretary some authority to waive or release borrowers’ education debt.
The Heroes Act was passed in the aftermath of the 9/11 terrorist attacks, and grants the president broad power to revise student loan programs during national emergencies. The Biden administration tried to use this law in its first forgiveness effort because at the time, the country was under a national emergency status from the Covid-19 pandemic.
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However, the conservative justices didn’t buy that argument.
“‘Can the Secretary use his powers to abolish $430 billion in student loans, completely canceling loan balances for 20 million borrowers, as a pandemic winds down to its end?'” Chief Justice John Roberts wrote in the majority opinion for Biden v. Nebraska. “We can’t believe the answer would be yes.”
Lastly, the Biden administration has now turned to the rulemaking process to deliver its relief. The president previously attempted to cancel the debt through executive action.

Student debt cancellation an important issue for voters

Biden likely wants to start forgiving student debt before voters cast their ballots in November.
Almost half of voters in a recent survey, or 48%, say canceling student loan debt is an important issue to them in the 2024 presidential and congressional elections. SocialSphere, a research and consulting firm, polled 3,812 registered voters, including 2,601 Gen Z and millennial respondents, in mid-March.

Forgiving student debt could especially help Biden with young voters, a demographic he’s been struggling with. Around 70% of Gen Z respondents said student debt cancellation was important to them in the election, that same survey found. More than half (53%) of respondents in that generation said they or someone in their household has student debts.
Biden’s plan is estimated to reach more than 30 million borrowers, when combined with his other ongoing debt forgiveness efforts, his administration said.
Mainly by improving current loan relief programs, the Biden administration has now cleared the education debts of 4 million people, totaling $146 billion in aid.
This is breaking news. Please check back for updates. More

A Walmart Supercenter cart sits outside of the store on February 20, 2024, in Hallandale Beach, Florida. 
Joe Raedle | Getty Images

When markets get rocky, dividend-paying stocks can give investors’ portfolios the cushioning they need to ride out volatile times.
Finding the right dividend payers can be difficult, though. Investors can turn to the expertise of Wall Street analysts who can identify stocks with long-term growth potential and the ability to generate the solid cash flows needed to support continued dividends.

Here are three attractive dividend stocks, according to Wall Street’s top experts on TipRanks, a platform that ranks analysts based on their past performance.
OneMain Holdings
This week’s first dividend pick is OneMain Holdings (OMF), a financial services company focused on the needs of non-prime customers. OMF stock offers an attractive dividend yield of 8.1%.
Aside from regular dividends, the company also boosts shareholder returns with share repurchases. In the fourth quarter, OneMain repurchased 531,000 shares for $20 million.
Recently, RBC Capital analyst Kenneth Lee updated his model and estimates for OMF stock and raised the price target to $55 from $50 to reflect a more favorable macro outlook. The analyst reiterated a buy rating on the stock, citing the company’s reliable business model and capital generation ability.
Lee said that OMF’s new price target is based on a price-to-tangible book value (2025 estimate) multiple of 2.9x. He thinks that the company warrants a premium multiple as it can deliver a very high return on tangible common equity of more than 40%, with the cost of equity (under normalized conditions) estimated in the range of 9% to 10% and finance receivables expected to grow by mid- to high-single digits.

“In our view, there could be meaningful opportunities for further growth in the non-prime personal loan markets, as the loans only form 16% of total non-prime unsecured credit,” said Lee.
Lee ranks No. 76 among more than 8,700 analysts tracked by TipRanks. His ratings have been profitable 68% of the time, with each delivering an average return of 17%. (See OneMain Holdings Financials on TipRanks)
Walmart
We move to big-box retailer Walmart (WMT), which recently announced about a 9% increase in its annual dividend to 83 cents per share, representing its largest hike in over a decade. The announcement marked the company’s 51st consecutive year of dividend raises. Walmart pays a dividend yield of 1.4%.
Following a meeting with Walmart’s management, Jefferies analyst Corey Tarlowe reiterated a buy rating on WMT stock with a price target of $70. Among the key highlights of the meeting was the analyst’s observation that the company is witnessing some signs of consumer stability. For one, the customer experience score rose 140 basis points in fiscal 2024, which ended Jan. 31.  
Tarlowe also noted increasing private label penetration, enhanced e-commerce shopping experience, better order economics with improved e-commerce margins in fiscal 2024, and an impressive rise in Sam’s Club’s membership levels that is expected to boost the top-line growth.  
Additionally, the analyst is upbeat about the prospects of Walmart’s international segment. He expects its sales to see high-single-digit growth on an annual average basis and projects profits to more than double by fiscal 2028 compared to fiscal 2023.
Commenting on WMT’s advertising business, Tarlowe said, “Last year, WMT’s global advertising business grew 28% to ~$3.4B and we believe that advertising remains a significant opportunity for WMT ahead.”
Tarlowe holds the 537th position among more than 8,700 analysts tracked by TipRanks. His ratings have been profitable 65% of the time, with each delivering an average return of 14.6%. (See Walmart Ownership Structure on TipRanks)
SLB
This week’s third dividend pick is oilfield services company SLB (SLB). Earlier this year, the company announced better-than-anticipated fourth-quarter results and increased its quarterly cash dividend by 10%. SLB stock offers a dividend yield of 2%.
On April 1, Goldman Sachs added SLB to its U.S. Conviction List with a price target of $62, as analyst Neil Mehta thinks that that the company is a leading energy services provider. It is also the preferred stock to gain exposure to international and offshore oil services growth, at an attractive price-to-earnings multiple of 13x (based on 2025 earnings estimates).
Mehta also highlighted SLB’s ability to generate strong free cash flow, which can drive capital returns and growth investments. The analyst expects management to return more than 60% of its free cash flow via share buybacks and dividends.
Furthermore, the analyst thinks that SLB’s digital business is underappreciated. He stated, “We believe SLB is uniquely positioned to expand its digital business given the industry is not as digitized and SLB is the only digital provider in the space that carries competitive moat.”
Mehta ranks No. 176 among more than 8,700 analysts tracked by TipRanks. His ratings have been successful 67% of the time, with each delivering an average return of 12.7%. (See SLB Stock Buybacks on TipRanks) More

YOUR GUIDE TO NAVIGATING YOUR FINANCIAL FUTURE

A “silver tsunami” of baby boomers is expected to turn age 65 in the next several years.
Reaching that age milestone will prompt big Medicare and Social Security decisions.
Here’s what experts say today’s retirees need to consider when it comes to those programs.

Thomas Barwick

A “silver tsunami” — with a record number of Americans expected to turn age 65 — is here.
Americans who reach that milestone age face high-stakes financial decisions.

Two of the most important choices retirees face — which Medicare health insurance coverage option to choose and when to claim Social Security benefits — come with deadlines.
And making a less-than-ideal selection may cost a retiree over their lifetime.
More than 11,200 baby boomers are expected to turn 65 every day from now through 2027, a phase that has been dubbed “peak 65.”
For many reasons, the generation entering this new life phase doesn’t have it easy.
A so-called three-legged stool of retirement planning — employer pensions, personal savings and Social Security — has largely gone by the wayside as many private-sector employees no longer have traditional pensions that may provide income throughout retirement, according to recent research from the Alliance for Lifetime Income.

Meanwhile, about 40% of households will not be able to maintain their pre-retirement standard of living due to insufficient retirement income, according to the Center for Retirement Research at Boston College.

Choosing Medicare coverage comes with trade-offs

Turning 65 ushers in a key milestone — eligibility for Medicare coverage.
Ideally, beneficiaries should sign up for all parts of Medicare the month before that birthday to avoid coverage gaps, according to a recent retirement report by J.P. Morgan Asset Management.
That coverage may come in the form of “original” Medicare — through Parts A and B, for hospital and medical insurance, as well as optional additional coverage through Part D drug coverage or medigap private insurance plans.
Alternatively, retirees may opt for private Medicare Advantage plans that may include prescription drug coverage and possibly also vision, dental and hearing.
Beneficiaries may revisit their coverage each year during open enrollment periods.
“It can be very confusing for people to sort through all of their options and try to figure out what the differences are across plans, but also what options will work for them over the next year and work well over the longer term as well,” said Gretchen Jacobson, vice president of Medicare at the Commonwealth Fund.
Today’s beneficiaries need to brace themselves for rising health-care costs.

A beneficiary who is 65 in 2024 and covered by original Medicare faces $542 in monthly costs on average, according to J.P. Morgan’s research. By 2054, when that beneficiary is 95, that may go up to $1,484 per month, J.P. Morgan said.
That’s based on an annual 6% health care inflation rate, which J.P. Morgan calls a “prudent” assumption.
In comparison, inflation is up 2.8% annually, based on the latest read of the Federal Reserve’s key inflation gauge, the personal consumption expenditures price index.
The monthly outlay for beneficiaries covered by Medicare Advantage is much lower, according to J.P. Morgan’s estimates. Someone turning 65 in 2024 may spend up to $427 per month for Medicare Advantage premiums and out-of-pocket costs. By 2054, when they are 95, that may climb to up to $990.
Based on the numbers, Medicare Advantage may seem like a better deal. But experts say there are trade-offs to consider.
New enrollees who opt for Medicare Advantage may later want to switch to original Medicare. But it may be difficult getting medigap coverage, depending on the state you’re in and your health status, said Sharon Carson, retirement insights strategist at J.P. Morgan Asset Management.

Having original Medicare also gives you more providers to choose from, as all providers who accept Medicare generally take original Medicare, Carson said. Consequently, retirees who split their time between two states tend to opt for original Medicare.
Because Medicare Advantage enrollees have no supplemental coverage, they should set aside more money for surprise out-of-pocket costs, Carson said.
Moreover, while retirees may opt for Medicare Advantage for the additional coverage those plans may provide, many people don’t actually use benefits such as dental, vision, fitness or over-the-counter medication coverage, recent research by the Commonwealth Fund found.
“They should also consider whether they will actually use those benefits, or if perhaps there’s a different plan that offers benefits they’re more likely to use,” Jacobson said.

Claiming Social Security early means taking a 30% cut

Americans who turn age 65 in 2024 have a Social Security full retirement age of 66 and 10 months.
For those who reach that age next year and thereafter, the full retirement age is 67, per changes enacted decades ago that are being gradually phased in.
The full retirement age is the point when retirees stand to receive 100% of the benefits they’ve earned.
But they may claim as early as age 62, though if they do so they will receive reduced benefits.
For those turning 65 now, that amounts to a benefit cut of around 30%. So if their full retirement age benefit is $1,000 a month, they will receive a $700 monthly check for life if they instead decide to claim at age 62.
Beneficiaries who delay even longer — up to age 70 — stand to receive a benefit increase of 8% per year for every year they delay claiming past full retirement age.

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“The best financial asset you can have is a higher Social Security annuity,” said Teresa Ghilarducci, a labor economist and retirement security expert.
“It’s inflation indexed and guaranteed for life,” she said.
Yet only about 8% of beneficiaries wait until age 70 to claim, according to Ghilarducci, a professor at The New School for Social Research and author of the book “Work, Retire, Repeat: The Uncertainty of Retirement in the New Economy.”
“Everyone should know that you have a penalty if you collect before 70,” Ghilarducci said.
However, most people do not delay benefits that long simply because they can’t, she said.
They may be forced out of work early and need to dip into Social Security to supplement their income when retirement savings fall short. Or they may be working but have taken a job that pays a lot less and make up for those missing wages with their Social Security checks.
Those who can’t delay their Social Security benefits for years can still increase their lifetime benefit income by delaying for just a few months, Ghilarducci said.
“Do whatever you can to bridge to a higher Social Security benefit amount,” Ghilarducci said.

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