Social Security and Tax Changes Impact 2025 Planning

As 2025 begins, significant changes in Social Security and tax regulations are emerging, affecting financial planning strategies in both the U.S. and Canada. In the U.S., Social Security benefits will increase by 2.5% due to inflation adjustments, with changes to the Full Retirement Age and the repeal of the Windfall Elimination Provision and Government Pension Offset impacting beneficiaries. In Canada, uncertainty arises from proposed tax changes including an increase in the capital gains inclusion rate, leading advisors to emphasize opportunities in registered plans. Meanwhile, California addresses climate policy shifts with federal waivers for clean air rules and local initiatives like EV rebates. Building an emergency savings fund remains crucial, with financial advisors recommending saving three to six months' worth of expenses to weather economic uncertainties. Overall, these developments underscore the importance of informed financial planning in adapting to new economic realities.