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The <keyword id="19903456" type="General" weightage="20" keywordseo="Income-Tax-department" source="keywords">Income Tax department</keyword> on Wednesday said 'substantial <keyword id="20138064" type="General" weightage="100" keywordseo="tax-savings" source="keywords">tax savings</keyword>' are expected for a vast majority of taxpayers due to reduction in the <keyword id="22526761" type="General" weightage="20" keywordseo="long-term-capital-gains" source="keywords">long term capital gains</keyword> <keyword id="45031" type="General" weightage="20" keywordseo="tax" source="Orion">tax</keyword> (LTCG) rate in the <keyword id="19895040" type="General" weightage="20" keywordseo="real-estate" source="keywords">real estate</keyword> sector. The Budget has reduced tax rates on capital gains earned from sale of house properties held for long term, but has removed the <keyword id="22142879" type="General" weightage="20" keywordseo="indexation-benefit" source="keywords">indexation benefit</keyword> available to taxpayers. The LTCG has been reduced from 20 per cent with indexation benefit to 12.5 per cent without indexation for the real estate sector. The indexation benefit allowed taxpayers to compute gains arising out of sale of <keyword id="801267" type="General" weightage="20" keywordseo="capital-assets" source="Orion">capital assets</keyword> after adjusting inflation. In a post on X, the income tax department said the nominal real estate returns are generally in the region of 12-16 per cent per annum, much higher than inflation. "The indexation for inflation is in the region of 4-5 per cent, depending on the period of holding. Therefore, substantial tax savings are expected to a vast majority of such taxpayers," it said. Giving a comparison of benefits based on the holding period of the real estate property, the I-T department said the new <keyword id="22422932" type="General" weightage="20" keywordseo="tax-rate" source="keywords">tax rate</keyword> without indexation is beneficial in most cases. For property held for five years, the new regime is beneficial when property has appreciated 1.7 times or more, while for a property held for 10 years, it is beneficial when the value has increased 2.4 times or more. For a property purchased in 2009-10, if value has increased to 4.9 times or more, it is beneficial, it said. "From the above examples, it is clear that only where returns are low (less than about 9-11 per cent per annum) that the earlier tax rate is beneficial, but such low returns in real estate are unrealistic and rare," the I-T department said. As per the changes brought in the 2024-25 Budget, the government has retained the indexation benefit for taxpayers on properties bought or inherited before 2001. The changes in the tax rate have been made effective from July 23, 2024.

Majority of taxpayers to have substantial tax savings due to reduction of long term capital gains on real estate: IT Dept

Today is the last day to file your <keyword id="19948101" type="General" weightage="20" keywordseo="income-tax-returns" source="keywords">income tax returns</keyword> for <keyword id="21169488" type="General" weightage="20" keywordseo="AY-2024-25" source="keywords">AY 2024-25</keyword>, without having to pay a <keyword id="19899183" type="General" weightage="20" keywordseo="penalty" source="keywords">penalty</keyword>. Starting tomorrow, you will be able to file your <keyword id="19897621" type="General" weightage="20" keywordseo="itr" source="keywords">ITR</keyword>, but you'd have to forego several benefits, like not being able to choose the old tax regime, or paying a penalty of Rs 1,000 (if your annual taxable income is less than Rs 5,00,000). As per official data, about 6 crore ITRs have already been filed so far, and around 70% of them have opted for the new tax regime. But if you have left your ITR filing to the <keyword id="22611090" type="General" weightage="20" keywordseo="last-minute" source="keywords">last minute</keyword>, and will rush to meet the deadline today, here's a handy list of mistakes you should avoid while filing your ITR: 1. Do not miss out on reporting on your income from other sources. Generally, we only account for our salary, income from business/profession and capital gains (if any) while calculating our tax liability. However, there is one crucial segment we tend to forget-income from other sources. This includes interest income from your savings account, fixed deposits, recurring deposits and bonds. 2. Income from other sources also includes any dividend income you've received throughout the year through stocks, mutual funds, and any monetary gifts with value of over Rs 50,000 you've received from friends, acquaintances, or anyone but your relatives. Don't forget to account for those as well. <div type="Article" hostid="261" msid="111406215" title="Wondering which ITR form is right for you? Know all about it here" mstype="2" mssubtype="0"></div> 3. In case your total annual income exceeds Rs 50,00,000, you have to disclose all details of your properties, both movable and immovable under <keyword id="22611091" type="General" weightage="20" keywordseo="schedule-al" source="keywords">Schedule AL</keyword>. This should also include any liabilities you have incurred on these assets. 4. If you are an NRI, or an Indian holding foreign assets, you will have to share details of all your foreign income, assets, accounts and stocks under <keyword id="22334040" type="General" weightage="20" keywordseo="schedule-fa" source="keywords">Schedule FA</keyword>, along with your ITR. This needs to be done, irrespective of whether your income is taxable in India or not. 5. If you are filing your ITR as per your AIS (<keyword id="20776896" type="General" weightage="20" keywordseo="annual-information-statement" source="keywords">Annual Information Statement</keyword>) and see erroneous entries, don't ignore them. File your ITR as per Form 26AS, which is a condensed version of AIS, and Form 16A and B, which is provided by your employer (both previous and current). But remember to go back and flag errors in AIS, otherwise the IT department could penalise you for willful misreporting of your income. <div type="Article" hostid="261" msid="111402608" title="ITR filing: Documents you need to file your income tax return" mstype="2" mssubtype="0"></div> 6. Do not forget to e-verify your ITR within 30 days of filing it. If you do not do this, your ITR filing will be considered invalid. If 30 days have passed since you filed your ITR post today, it will be seen as filing ITR post deadline, and you'll have to pay a fine. So, get going on your ITR filing, right away!

Filing your ITR at the last minute? Don't make these mistakes

<ul class="summary-list"><li>Interest in moving to Canada has spiked among Americans after the election.</li><li>Beyond the physical move, there are financial considerations that potential movers should know of.</li></ul>The result of the 2024 elections left about half of the US displeased. As Donald Trump prepared to return to the White House, many Americans began considering a move up north, according to <a target="_blank" href="https://trends.google.com/trends/explore?date=today%201-m&amp;geo=US&amp;q=moving%20to%20canada&amp;hl=en-US">Google search traffic</a> at least.Interest in <a target="_blank" class="" href="https://www.businessinsider.com/we-moved-to-canada-not-perfect-but-prefer-over-us-2024-11">moving to Canada</a> tends to spike after big political events such as the <a target="_blank" href="https://trends.google.com/trends/explore?date=2016-11-01%202016-11-30&amp;geo=US&amp;q=moving%20to%20canada&amp;hl=en-US">2016 election</a> and the <a target="_blank" href="https://trends.google.com/trends/explore?date=2022-06-01%202022-06-30&amp;geo=US&amp;q=moving%20to%20canada&amp;hl=en-US">overturning of the Roe v. Wade</a> Supreme Court ruling.This phenomenon doesn't just live on the internet, either — some US residents are seriously considering the move."Even when Trump was elected last time, a lot of people felt that they weren't as comfortable staying in the States, and so we actually did see an influx of people moving to Canada," said Tiffany Woodfield, a senior financial advisor at SWAN Wealth Management of Raymond James.Moving, especially across borders, is a big decision and shouldn't be taken lightly. While the physical act of moving is complicated enough, Woodfield points out that there are a lot of financial considerations to be aware of."I think sometimes it can be a knee-jerk reaction," Woodfield said of <a target="_blank" class="" href="https://www.businessinsider.com/we-moved-to-canada-not-perfect-but-prefer-over-us-2024-11">moving to Canada</a>. "If they don't plan ahead of time, they can fall into traps that end up costing them money."<h2 id="c4feab40-7084-4563-951b-72a890ad2b58">You need to file US and Canadian taxes</h2>US citizens residing in Canada might not realize that even on the other side of the border, they're still not free from their tax obligations to Uncle Sam.If you are a US citizen, you still need to file federal US taxes and report your worldwide income to the IRS no matter where you live. In Canada, taxes are based on your residency status, so if you spend more than 183 days of the year living in Canada, you owe the Canadian government taxes.To prevent ex-pats from getting taxed twice on their income, the US and Canada have a tax treaty that provides a foreign income tax credit for any income tax paid to the other country, Woodfield explained. That means you can offset your US tax liability with taxes already paid to Canada, but you still need to file two separate tax returns — one to Canada and one to the US — to receive a tax credit.Additionally, the promise of free healthcare in Canada might sound enticing, but that does come at the cost of higher taxes, so be aware that your Canadian tax bill will probably be higher than what you paid in the US. You also don't have the option to file joint income tax returns with your spouse in Canada, Woodfield warned.<h2 id="7d31b42f-84db-43c3-b2f8-4f871c9958bf">Some Canadian investments have complicated tax implications</h2>"As a US person living in Canada, you don't want to invest in Canadian mutual funds or Canadian ETFs," Woodfield said. That's because these investments are considered Passive Foreign Income Corporations (PFIC) by the US government.PFICs are subject to unfavorable tax treatment from the IRS. The associated tax forms are lengthy and complicated, and you may end up paying high tax rates. If you're still a US citizen, investing in a Canadian mutual fund or ETF simply isn't worth the hassle.<h2 id="0333acc5-88aa-436b-bf74-7cb1b79b71b0">Bringing your retirement plan over the border can be tricky.</h2>401(k)s are a popular way to save for retirement here in the US, but Canadian employers offer a different type of retirement plan: the Registered Retirement Savings Plan (RRSP).Once you move to Canada, you won't be able to actively manage the holdings in your 401(k), according to Woodfield. One workaround is to roll your 401(k) to an IRA and have it managed in Canada. US citizens should also be aware that, in most cases, they won't be able to contribute to their IRA once they move to Canada.Another option is to transfer your US retirement account into an RRSP. However, if you choose this step, make sure you're committed to moving to Canada permanently, as you cannot move RRSPs to IRAs, Woodfield said.You may not be able to bring your brokerage accounts over the border, either. Some people don't realize this until they update their address with their US brokerage account after moving and receive a letter informing them that they have to close out their account.<h2 id="2d468c1f-efc0-45a8-9a7c-53c03c550ff1">You'll need a new financial advisor…and a lot of time</h2>US financial advisors are prohibited by law from providing Canadian residents with financial advice, as they aren't licensed in Canada. If you want expert advice, you need to work with a dual Canada / US licensed advisor.The earlier you start preparing for your cross-border move, the better — ideally, one to two tax years before moving, Woodfield said. That way, you can plan certain taxable events ahead of time and realize the greatest amount of savings, such as liquidating mutual funds. It's also easier to sell your home while you're still in the US, Woodfield said.If you've already begun the moving process or you're already in Canada, don't panic. Woodfield has worked with plenty of people after they've already moved, but the more time you give yourself, the better.Moving across the border is no simple feat, so make sure you're confident about your choice."I've had clients that have moved, and then after the fact, they think, 'Oh, I shouldn't have done this,'" Woodfield said."It's very hard to go back, so people need to be aware of that."

Americans moving to Canada should be aware of these 4 tax and investment implications

Finance Minister <keyword id="19916618" type="General" weightage="20" keywordseo="Nirmala-Sitharaman" source="keywords">Nirmala Sitharaman</keyword> on Tuesday announced <keyword id="20404375" type="General" weightage="20" keywordseo="income-tax-relief" source="keywords">income tax relief</keyword> for the <keyword id="20071167" type="General" weightage="100" keywordseo="middle-class" source="keywords">middle class</keyword>, a Rs 2 lakh crore outlay for <keyword id="22517841" type="General" weightage="20" keywordseo="job-creation-schemes" source="keywords">job creation schemes</keyword> over the next five years and a spending splurge for states run by her party's new coalition partners as she unveiled <keyword id="20509939" type="General" weightage="20" keywordseo="Modi-3-0" source="keywords">Modi 3.0</keyword> government's first budget after the general elections. With rural distress and unemployment being blamed for BJP losing its majority, Sitharaman in her seventh straight budget provided Rs 2.66 lakh crore for <keyword id="20027688" type="General" weightage="20" keywordseo="rural-development" source="keywords">rural development</keyword> and maintained spending on long-term infrastructure projects at Rs 11.11 lakh crore to boost <keyword id="19900794" type="General" weightage="20" keywordseo="economic-growth" source="keywords">economic growth</keyword>. She abolished 'angel tax' for all classes of investors in startups, cut customs duty on mobile phones and gold and simplified capital gains tax. She, however, raised the securities transaction tax (STT) on futures and options of securities, which led to tanking of stock markets. "India's economic growth continues to be the shining exception (in a world that is gripped by policy uncertainties) and will remain so in the years ahead," she said. "In this budget, we particularly focus on <keyword id="19898684" type="General" weightage="20" keywordseo="employment" source="keywords">employment</keyword>, <keyword id="20374219" type="General" weightage="20" keywordseo="skilling" source="keywords">skilling</keyword>, MSMEs, and the middle class." Besides Rs 2 lakh crore provided over a five year period for schemes and initiatives to facilitate employment, skilling and other opportunities for 4.1 crore youth, "I have made a provision of Rs 1.48 lakh crore for education, employment and skilling," she said. For Bihar, where assembly elections are due next year, the finance minister announced spending of Rs 60,000 crore on infrastructure projects like expressways, power plant, heritage corridors and new airports. The support to Bihar, whose ruling party and BJP's partner JD-U has been demanding an economic package and special category status for the state, is in the form of capital projects but not subsidy or cash dole. Similarly, for Andhra Pradesh, whose ruling TDP recently joined BJP-led NDA, she allocated Rs 15,000 crore in financial aid through multilateral agencies. A similar request for support to Bihar will be expedited, she said. For the middle class, she raised standard deduction -- a flat deduction from total salary earned by an employee in a year before calculating applicable income tax rate -- by 50 per cent to Rs 75,000 and tweaked tax slabs for taxpayers opting for the new income tax regime. This will lead to taxpayers under the new tax regime -- which offers lower rates of taxes but permits limited deductions and exemptions -- saving up to Rs 17,500 in tax annually, she said. To spur employment, the Budget provided for incentives for companies, including paying for one-month salary for first-time employees, incentive at specified sale to both employee and empower with respect to their retirement fund contribution in the first four years of employment and reimbursing employers up to Rs 3,000 per month for 2 years towards EPFO contribution of each additional employee. Also, a programme to improve skills as well internship for students and subsidised loans for higher education will be provided, she said. India's official unemployment rate in urban areas is pegged at 6.7 per cent but private agencies put it at much higher levels. Buoyed by robust tax collections and a higher-than-expected dividend receipt from the Reserve Bank, Sitharaman said the government's fiscal deficit -- the difference between the total revenue earned and total expenditure -- will be trimmed to 4.9 per cent of the GDP in 2024-25, below the 5.1 per cent figure estimated in the interim budget she presented in February. She reduced gross market borrowing marginally to Rs 14.01 lakh crore. The Budget for 2024-25 fiscal (April 2024 to March 2025) allocated Rs 1.52 lakh crore for agriculture and allied sectors, aid for building 3 crore affordable housing units in urban and rural areas, provided credit support to small and medium businesses, raised small loans to Rs 20 lakh for small business, proposed setting up 12 industrial parks, and provided for setting up a Rs 1,000 crore venture capital fund for space sector.

Modi 3.0 1st Budget: Tax relief for middle class, Rs 2 lakh cr job scheme

<div type="image" title="Are Indians depositing less money in banks, or more in mutual funds? Turns out, it&amp;#39;s neither of those." msid="113663806" hostid="261" sizebytes="1121785"></div> Over the past few months, there’s been a lot of brouhaha about the lagging pace of <keyword id="20202062" type="General" weightage="20" keywordseo="bank-deposits" source="keywords">bank deposits</keyword> in India. Simply put, the rate at which Indians are depositing their hard-earned money in banks has been falling constantly, and some blame the increasing financialisation of <keyword id="20751315" type="General" weightage="20" keywordseo="household-savings" source="keywords">household savings</keyword> in the country or the rising preference of Indians towards <keyword id="19929240" type="General" weightage="20" keywordseo="mutual-funds" source="keywords">mutual funds</keyword> and shares. So, the hypothesis is that people are choosing to invest more in mutual funds and the Indian <keyword id="19949641" type="General" weightage="20" keywordseo="equity-markets" source="keywords">equity markets</keyword> through direct investments, IPOs, or NFOs, the money flowing into Indian banks in the form of deposits is slowing down. But is that really the case? <h2>A crisis or a phase?</h2><keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords" meta.keywordsubtype="org" meta.entityname="RBI" meta.hostid="261" meta.entityid="RBI">RBI</keyword> data suggested that for the quarter ended June 2024, bank deposits grew at 11.7%. On the other hand, credit growth has outpaced this at 15%. This means that the outflow from banks as loans is far greater than the inflow into them in the form of deposits in Q1 of FY 2024-25. The situation largely saw cut-copy-paste in the first week of September as well, with loans registering a 13.3% YoY growth during the period, while deposits rose only 11.1%. This gap has only been widening for the last 3 years. Since deposits are how banks gather assets to further lend and earn interest income as a consequence, even a slight dip could set the alarm bells ringing for banks, and rightfully so. And truth be told, mutual funds are indeed taking on bank deposits in a big way. Per a report by Franklin Templeton, in August 2024, the AUM (assets under management) of Indian mutual funds, or the total funds managed by them, stood at 31.3% of total bank deposits in the country, up from 24.20% during the year-ago period. As of August 2024, the AUM of mutual funds stood at Rs 66.17 lakh crore, an all-time high. But all said and done, is this really the reason why the rate of bank deposits is falling behind? SBI has dismissed this to be a “statistical myth”, and experts point out that since equity and fund houses also keep the cash in their respective bank accounts, there’s no cause for concern. So, is financialization really to be blamed for the trailing tempo of deposits? Or is something else happening behind the scenes? We take a closer look: <h2>First, are household deposits really slowing down? And is that a cause of concern?</h2>Data from Motilal Oswal suggests the contrary. Deposits grew by around 10.4% between March 2020 and August 2024. Data from RBI also highlights that as of August 9, 2024, bank deposits witnessed a YoY growth of 10.8%. The loan-to-deposit ratio for the retail segment, which indicates what percentage of its total deposits the banks lend out as loans, has stayed at 77.5%, above the 77% mark for the tenth straight month. <div type="image" title="Yes, household deposits (as % of total deposits) have dipped, but the drop is far from significant" msid="113663882" hostid="261" sizebytes="306706"></div> Also, we can’t forego the fact that the share of Indian households in bank deposits has indeed slowed down. However, data from Axis AMC shows that the dip is marginal—from 63% in 2022 to 62% in 2023 and 61% in 2024. What has slowed down even more considerably is the share of government deposits in the aggregate bank deposits, which has dipped from 14% in 2018 to 9% in 2024. So, it's not just household deposits, you see. Moreover, as of March 2024, the collective CASA ratio (current and <keyword id="114757" type="General" weightage="20" keywordseo="savings-account" source="Orion">savings account</keyword> deposits) of all commercial banks in India stood at 41.00%, down from 43.1% in March 2023 and 45.2% in March 2022, marking a nearly 5% point decline over the past year, while still staying over the 10-year average of 39.2%. This implies that Indian banks are relying more on higher-cost funds (savings accounts), which can limit their profitability. <h2>What is this financialisation of savings we are talking about?</h2>Then again, there is no doubt about the growing affinity of Indians towards mutual funds and stock markets. Recent data from CBDT (Central Board of Direct Taxes) highlights that India’s net direct tax collection surged by around 22%, driven exclusively by the significant uptick in the collection of Securities Transaction Tax (STT), which doubled to Rs 26,154 crore, from Rs 13,352 crore in the year-ago period. Why does this matter? STT is levied when you buy or sell equity shares on stock exchanges, sell <keyword id="6361918" type="General" weightage="20" keywordseo="equity-mutual-funds" source="Orion">equity mutual funds</keyword>, and trade in futures and options in the equity segment. Such taxes, including the multiple other taxes in equity market investments, are considered as leakages as the money moves out of the economy into government coffers. Data from a ValueQuest report explains that over the last 20 years, the markets have handsomely rewarded the investors, generating over $900 billion in incremental value for them. This is the major driver behind the dramatic rise in investment flowing towards the equity markets. There’s further proof of this budding romance, if you check the demat pudding. The number of demat accounts, which are a primary requisite for participating in the stock markets, also burgeoned by 42.3 lakh in August 2024, taking India’s total tally of demat accounts beyond 17 crore. To put this in perspective, this is almost equivalent to the population of just 8 nations in the world, including China, the US, Brazil and more. Vivek Iyer, Partner, Grant Thornton Bharat thinks it's rather important, as well. “Financialisation of household savings in India is an indication of deepening capital markets in the market, especially from a retail investor standpoint. Bank deposits with a modest rate of return are no longer the only option for savings for investors. Investors today have more avenues for wealth creation in the form of public capital markets, which have democratized wealth creation and provided equality of opportunity to retail investors”, he says. Yes, Indians are investing more and more in the markets, and in mutual funds. But is it a sin to look out for inflation-beating returns, which the stock markets offer, and vanilla bank deposits don't? After all, the allure of 12-13% annual returns offered by <keyword id="45369" type="General" weightage="20" keywordseo="equities" source="Orion">equities</keyword> can certainly pale the stability offered by good old deposits, which generally do not go beyond 9% when it comes to annual returns. But all of this is not what is behind the slowdown. India is still a toddler in the school of savings financialization, with less than 10% of the population holding a demat account, and less than 5% of us saving in equities. That's a drop in the ocean of deposits, far inadequate to trigger a tsunami. <h2>Tell me why lagging deposits have nothing to do with Indians investing more in mutual funds!</h2>Says Shweta Rajani, Head - Mutual Funds, Anand Rathi Wealth Limited, “Households' equity holdings composition grew from 11.1% in FY 23 to 14.7% in FY 24. This trend reflects a growing awareness of investment options, empowering individuals to take control of their financial futures. Despite this transition towards equities, banks still hold a significant share of household financial savings—33.5% in FY24 compared to 34.9% in FY23”. Also, household savings and their subsequent financialization do not have much to do with deposit creation, which is entirely made by banks. What actually drives increased deposits is credit growth or increased lending. When interest rates are eased, people tend to borrow more and spend more, which circulates more money in the economy. For the past 4 years, RBI has been tightening the screws on interest rates, which raises the cost of borrowings, and makes it more expensive to take loans, putting a dampener on credit growth, but effectively curbing inflationary pressures. The last time RBI cut the repo rate by 40 basis points was back in May 2020, 4 years ago. The lag in <keyword id="19998084" type="General" weightage="100" keywordseo="deposit-growth" source="keywords">deposit growth</keyword> we’re witnessing is almost 3 years old. Coincidence much, or just good old economics at work? But with the Fed recently setting a rate cut precedent by slashing 50 bps off its interest rate, RBI is expected to follow suit in the next MPC (Monetary Policy Committee) meeting, scheduled for November 2024. A rate cut would ease the aforementioned high cost of borrowing, and increase loan-taking for corporates and institutional investors, thereby stoking consumption in the economy. And then, deposit creation in banks is likely to return to its former glory. If not, then that would be a curious case to unravel! But that worry is for another day. Do you have insights or personal experience to share on your personal finances or money? Contact us at <a target="_blank" class="c-link" href="mailto:businessinsider@timesinternet.in">businessinsider@timesinternet.in</a>.

Simply Put: A Deposit Dilemma — What's the fuss about a crisis in Indian bank deposits? Are mutual fund investments to blame?

<div type="image" title="For the unversed, trading in futures and options can be akin to setting their hard-earned money on fire" height="900" width="1200" msid="114064202" hostid="261" caption="&amp;lt;p&amp;gt;For the unversed, trading in futures and options can be akin to setting their hard-earned money on fire&amp;lt;/p&amp;gt;"></div> Once upon a time, there thrived a wild, wild land. Here, it was all about super high monetary stakes, lightning-fast trade deals, and bucketloads of money shifting hands every single second. This wilderness lured millions of individuals with the promise of super duper high returns. But, at what cost? Welcome to the unforgiving, ultra-risky wild west of <keyword id="19991165" type="General" weightage="20" keywordseo="Indian-equity-markets" source="keywords">Indian equity markets</keyword> called the <keyword id="145718" type="General" weightage="100" keywordseo="Futures-and-Options" source="Orion">futures and options</keyword>. Here, everyone seems to just fly right through the bright red-flagged warnings of financial risks to earn even a fraction of these promised returns. Most burn themselves in the process, but carry on nevertheless, as if nothing ever happened. <h2>Chasing the cloudy profits</h2>The data conclusively proves that every 9 out of 10 individuals only lost their hard-earned money in this land. But hey, what do the numbers know? Some hide their losses out of shame, some out of fear. The proponents, meanwhile, proudly boast unusually high returns on their investments, some open social media channels while others encourage their friends and family to take the plunge. Naturally, news of this unstoppable and humongous en-masse migration to the F&amp;O (futures and options) town has reached sheriff <keyword id="19901201" type="General" weightage="20" keywordseo="SEBI" source="keywords" meta.keywordsubtype="org" meta.entityname="SEBI" meta.hostid="261" meta.entityid="SEBI">SEBI</keyword>, galvanising them into action. After all, it was time to put a leash on this madness and save the common man. The inhabitants of this town doubled in the last 2 years, from 51 lakh in FY22 to 96 lakh in FY24—99.8% of whom were small and mid-income traders. But profits? Well, that's a different, rather completely absent story. <h2>Que Sera Sera, much?</h2>A recent report by SEBI (Securities and Exchange Board of India) that studied profits and losses made by traders in the equity derivatives segment between FY22-24 exposed the mad mania of futures and options trading in India, especially since the pandemic. Per the report, 91.1% of individual traders, or about 73 lakh traders had only lost money trading in futures and options in FY24. Between FY 22-24, over 1 crore traders, or about 92.8% of individual traders, had lost Rs 2 lakh each. But once bitten, twice shy? Well, not in this case. More than 75% of individuals, who had only made losses trading in F&amp;O in FY22 and FY23, continued to trade vigorously in FY24 as well, without any changes in the bottom line, which remained deep in red and negative. So, then all these traders must be uber-rich, with tons of cash and not much care to spare? Nope. 76% of traders in the F&amp;O space in FY24 had an annual income of less than Rs 5 lakh. 2 years ago, their share stood at 71%. And their choice of poison? Options! In FY24, 60% of traders made losses trading in futures, but a whopping 91.5% burnt their funds trading in options. Mind you, futures are riskier than options. With futures, which require significant capital investment, the buyer and seller both are contractually bound to adhere to the pre-determined strike price of the futures or options contract, irrespective of whether the prevailing prices are higher or lower (and thus, resulting in losses for either the buyer or seller). With options, since this adherence ain't necessary, individuals end up taking debt to take highly leveraged positions while trading here. <h2>Scale of the explosion</h2>Anyone who trades even infrequently will tell you that a demat account is the mitochondria or powerhouse of the trading cell. As of August 2024, India had over 17.1 crore <keyword id="20957284" type="General" weightage="20" keywordseo="demat-accounts" source="keywords">demat accounts</keyword>, which are a prerequisite for trading in the markets. India is the 9th biggest country in the world, in terms of total demat accounts. Did you know that our demat accounts are at par with the entire population of Bangladesh? Talk about scale! Just 4 years ago, in March 2020, this number was a mere 4 crore. Naturally, the total F&amp;O turnover on both <keyword id="20004725" type="General" weightage="20" keywordseo="NSE" source="keywords" meta.keywordsubtype="org" meta.entityname="NSE" meta.hostid="261" meta.entityid="NSE">NSE</keyword> and BSE has hit the roof, and also broken it. As of October 4, 2024, the total futures and options turnover on NSE stood at a massive Rs 4,78,27,27,750.30 crore. Good luck counting the thousands! <table style="border-width: initial; border-style: none;" class="redcator-table-advance"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Year </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Total Turnover (Both Futures and Options) (In Rs Crore) </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">2020-21 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">64,36,03,951.51 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">2021-22 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">1,69,52,33,134.47 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">2022-23 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">3,82,23,26,468.06 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">2023-24 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">7,99,27,67,152.43 </td></tr></tbody><tbody></tbody><tbody></tbody><tbody></tbody></table>Source : NSE Another metric that underlines the meteoric growth of trading in India is the collection of STT or <keyword id="20930760" type="General" weightage="20" keywordseo="Securities-Transaction-Tax" source="keywords">Securities Transaction Tax</keyword>. As of September 2024, India's STT mop-up had gone past Rs 26,000 crore. Traders have to pay STT whenever they buy or sell any security in the market. So, more trading brings in more STT, and hence, more revenue for the government, so they're not really complaining. After all, this is certainly what they'd call enviable growth. As of August 2023, our STT collection stood at about Rs 21,599 crores. And in FY20-21, India's STT collection had been Rs 16,000 crore. If only our salaries also managed to grow at this rate! <h2>So, what's happening?</h2>Two things. One, it's the big bulls who are raking in all the moolah. And it's the younger lot (those aged under 30) who are propping them up for this. In FY24, 43% of individual traders in the market were less than 30 years of age. In just one year, this number has swelled by 12 percentage points from just 31% of individual traders. But who says ageing is bad? Wrinkles and silver hair seemingly have a propensity of incurring lesser losses in the market. In FY24, only 79% of traders aged above 60 years made losses, as compared to 93% of those aged below 30. Small and mid-income traders, which make up 98% of the total trader base, witnessed average losses per person of Rs 65,000 and Rs 1.5 lakh in FY24 in futures and options, respectively. The winner here? Clearly, the big bulls, who declared an annual income of over Rs 1 crore, ended up with average profits of Rs 96,000 per person this year. <h2>What’s the sheriff up to?</h2>The government has finally swung into action, hiking the STT rate for F&amp;O during this year’s budget. Effective October 1, 2024, the STT on futures stands at 0.02%, up from 0.0125%. For options, it was upped to 0.1% versus 0.0625% previously. Small margins, but huge impact oncoming. Says Puneet Sharma- CEO and Fund Manager at Whitespace Alpha, “SEBI aims to enhance market stability while safeguarding investor interests, reflecting the regulator's intent to balance risk management with market participation”. But this might come with its own share of challenges, too. “Stricter norms around leverage, transparency, and capital adequacy could limit the ability of investors to determine their own risk appetite, thereby stifling innovation in trading strategies. Over-regulation in an environment that thrives on strategic flexibility and creativity could dampen the market’s dynamism, affecting India's competitiveness in the global derivatives landscape”, he observes. SEBI recently came out with a set of guidelines that aim to thwart <keyword id="19972907" type="General" weightage="20" keywordseo="retail-investors" source="keywords">retail investors</keyword>' participation in futures and options and hinder them from taking undue risks. Here's a quick recap of what's to come for the residents of the F&amp;O town Margin Requirements: To battle the high volatility and chaos which is generally seen on expiry days(i.e the last mandated date, post which an option becomes invalid), SEBI will put in place an extreme loss margin (ELM) of 2% for all open short options on the day of expiry. Translation? Traders will need to pony up more cash upfront, leaving them with fewer funds to take on risky bets. It ain't a choice: No more of one expiry every single day! Going ahead, an exchange like BSE or NSE will just be able to offer weekly expiries, that too, only on one benchmark index, as opposed to an entire buffet it currently offers. At present, NSE offers weekly options contracts for its financial index, bank and midcap indices. But say goodbye to this, and hello to derivatives on only 1 index per exchange. Raising the bar: Effective November 30, 2024, the minimum contract value for index derivatives will be upped to Rs 15 lakh, from the present Rs 5-10 lakh. The hope is that by making it ultra-expensive to enter these trades, investors will be dissuaded from taking on risky trades. Pay upfront: Starting February 2025, those trading in options will have to pay the entire options premium upfront, even before their trades are executed. This is because options generally carry very high leverage, and paying a significant sum upfront can force traders to think twice. Invigilation Pro Max: Starting April 1 2025, to make sure that the number of positions for equity index derivatives does not slyly slip over the mandated limit, especially on expiry days when trade volumes are huge, the exchanges will have to take a minimum of 4 position snapshots randomly. The question is, will these injections of sobriety be enough to calm down the steroid-fed bull of the futures and options market in India? Well, only time and market turnover will tell! For more insights into the financial markets and business news, stay tuned to our site and social media handles. And don’t forget to subscribe to Business Insider India’s newsletters for your weekly dose of Simply Put! Disclaimer: The content on this website is for informational purposes only and should not be construed as investment advice. We recommend readers consult certified, qualified and registered advisors for professional and personalised financial advice.

SIMPLY PUT: SEBI is on a mission to take on the wild, wild west of futures and options in India. Here’s why, what, and how

At a campaign rally for former President Donald Trump in New York on Sunday, <a href="https://www.businessinsider.com/elon-musk" target="_blank">Elon Musk</a> said he'd save the United States $2 trillion through a <keyword id="23593857" type="General" weightage="20" keywordseo="Department-of-Government-Efficiency" source="keywords">department of government efficiency</keyword>. Howard Lutnick, the CEO of the financial-services company <keyword id="20371653" type="General" weightage="20" keywordseo="Cantor-Fitzgerald" source="keywords" meta.keywordsubtype="org" meta.entityname="Cantor Fitzgerald" meta.hostid="261" meta.entityid="Cantor Fitzgerald">Cantor Fitzgerald</keyword>, introduced Musk at the event. As he took the stage, Lutnick asked the Tesla and SpaceX CEO, "How much do you think we can rip out of this wasted $6.5 trillion <keyword id="23762349" type="General" weightage="20" keywordseo="Harris-Biden-budget" source="keywords">Harris-Biden budget</keyword>?" "I think we can do at least $2 trillion," Musk replied. "I mean, at the end of the day, you're being taxed. You're being taxed. All government spending is taxation. So whether it's direct taxation or all government spending, it either becomes inflation or it's direct taxation." Musk added: "Your money is being wasted, and the <a href="https://www.businessinsider.com/trump-adopts-elon-musk-plan-cut-government-spending-efficiency-reform-2024-9" target="_blank">Department of Government Efficiency</a> is going to fix that. We're going to get the government off your back and out of your pocketbook." Trump has previously said he'd put Musk in charge of a department of government efficiency — or "DOGE," after the cryptocurrency — if he wins the election. Musk did not elaborate on policy changes or spending cuts he would implement if he were to join a second Trump administration. Musk and representatives for the Trump campaign did not immediately respond to a request for comment. The federal government's spending in the 2024 fiscal year was $6.75 trillion. Musk's suggested cuts would represent nearly a third of that sum. It's unclear where Musk's suggested cuts would come from. Both Trump and Vice President Kamala Harris have proposed various tax changes as part of their campaigns. Those proposed by Trump include ending taxes on tips and overtime, reducing the corporate tax rate, hiking tariffs on imports, and ending taxes on Social Security benefits. Harris has proposed tax credits for new parents and homeowners as well as an expansion to the Small Business Tax Deduction. When it comes to Social Security, the Committee for a Responsible Federal Budget has said that neither Trump nor Harris has proposed a plan that would fix Social Security's finances but that Trump's proposals would "dramatically worsen Social Security's finances." Trump's campaign <a href="https://www.businessinsider.com/trump-presidency-would-make-things-worse-for-social-security-nonprofit-2024-10" target="_blank">has disputed</a> the findings of the CRFB's report. The Wall Street Journal organized a <a href="https://www.wsj.com/politics/elections/economists-say-inflation-deficits-will-be-higher-under-trump-than-harris-0365588e" target="_blank">survey</a> of 50 economists from October 4 to October 8 and found that 65% said the deficit would get worse with the policies Trump has proposed. <h2 style="color: rgb(34, 34, 34); font-family: Arial, Helvetica, sans-serif; background-color: rgb(255, 255, 255);">Musk's growing support for Trump</h2>Musk, the world's richest person, has become one of Trump's staunchest and most vocal backers in this election cycle. Musk <a href="https://www.businessinsider.com/elon-musk-donald-trump-feud-relationship-timeline-2022-7" target="_blank">endorsed Trump in July</a> after the former president survived an assassination attempt during a rally in Pennsylvania. The two have discussed Musk holding a seat in Trump's Cabinet if the former president were to be reelected. During a livestream on X in August, Musk said he would be "happy to help out" with a government-efficiency commission. In a September speech, Trump again mentioned the commission, saying he'd want Musk to oversee the project. Musk's financial power is translating into real moves on the campaign trail. As of Friday, Musk has spent just under $119 million on his pro-Trump political action committee, America PAC. He has been hitting the road in the key swing state of Pennsylvania and holding his own rallies in support of Trump. Musk has also said he's launching a daily $1 million giveaway to a swing-state voter who signs his petition affirming support for free speech and the right to bear arms. Some election-law experts previously told BI the giveaway plan might be illegal. With the election just over a week away, the race between Harris and Trump remains on a razor's edge. A national poll by <a href="https://www.nytimes.com/2024/10/25/us/politics/poll-harris-trump-times-siena.html" target="_blank">The New York Times and Siena College</a> released Friday found Trump and Harris to be neck and neck at 48% for the popular vote. October 28, 2024, 3:08 a.m. ET: This story has been updated with context on Musk's comments about the prospect of taking on a government role, details about Musk's political spending in the 2024 election cycle, and details on Trump's and Harris' respective economic proposals.

Elon Musk took the stage at a Trump rally to talk about taxes and the 'Department of Government Efficiency'

The deadline to file your <keyword id="19948101" type="General" weightage="20" keywordseo="income-tax-returns" source="keywords">income tax returns</keyword> is approaching fast, and Sana is perplexed. All of 23, she's just started earning and working at an MNC, earning Rs 7,00,000 per annum, and can't figure out which <keyword id="20301439" type="General" weightage="20" keywordseo="tax-regime" source="keywords">tax regime</keyword> would work best for her. If you're having the same concerns and can't seem to wrap your head around the <keyword id="19935168" type="General" weightage="20" keywordseo="new-tax-regime" source="keywords">new tax regime</keyword>, here's a ready reckoner for you: When should I choose new tax regime? Think of choosing a tax regime as having to choose a friend in office. The <keyword id="8706677" type="General" weightage="20" keywordseo="old-tax-regime" source="Orion">old tax regime</keyword> is that aged, wise senior who has answers and hacks for everything. Want to get over with a boring project quickly? They will certainly have a trick up their sleeve! On the other hand, the new regime is far more chilled out, lax and is a no-nonsense person who wants nothing to do with long documents and longer meetings. The new regime was introduced in budget 2020 to simplify taxation, and offer lower rate of taxes as compared to the old regime. However, there's a catch. You cannot claim the 70+ exemptions and deductions that help bring down your taxable income and hence, reduce your tax liability. This option is exclusively available under the old tax regime. The main USP of this tax regime? Lower tax rates, and fuss of deductions! Consider this. If your income is within the range of Rs 5,00,000-Rs 12,00,000, and you have no investments, <keyword id="99916" type="General" weightage="20" keywordseo="house-rent-allowance" source="Orion">house rent allowance</keyword> (<keyword id="19944588" type="General" weightage="20" keywordseo="hra" source="keywords">HRA</keyword>), health/life insurance premiums or other such deductions to claim, the new tax regime would obviously make more sense to you, given the significant difference in tax liabilities (just 5% under new regime, and a whopping 20% in old regime for those in the Rs 5-6 lakh bracket!) <div type="image" title="Tax rates under old and new regime" msid="111685908" hostid="261"></div> So, if you're someone who hates complex tax calculations, wants minimal tax deductions, the new regime might just be for you! But remember, there are two conditions under which this new regime will be automatically chosen for calculating your taxes: <ul><li>If you keep procrastinating and don't file your <keyword id="6374875" type="General" weightage="20" keywordseo="ITR" source="Orion">ITR</keyword> till July 31, 2024</li><li>If you do not specifically opt for the old tax regime on your employer's HR portal</li></ul>Also, if you earn less than Rs 3,00,000 per annum, you are completely exempted from paying any tax at all. In the old regime, this basic limit is slightly lower at Rs 2,50,000. Also read: <a href="https://www.businessinsider.in/personal-finance/income-tax/all-you-need-to-know-about-the-new-tax-regime/articleshow/111578840.cms" data-type="tilCustomLink">All you need to know about the new tax regime</a> So, what do I get under this regime? Thanks to a rebate under Section 87A, if you earn up to Rs 7 lakh per annum, your tax liability (and Sana's as well) will effectively be zero. This is limited to Rs 5 lakh under the old regime. While a <keyword id="20429578" type="General" weightage="20" keywordseo="standard-deduction" source="keywords">standard deduction</keyword> of Rs 50,000 is available under both of them (so you can directly deduct Rs 50,000 from your total income before even beginning to calculate your tax liability), there are a lot more deductions and exemptions that this regime DOES NOT allow you to avail: <ul><li>Leave Travel Allowance (LTA)</li><li>House Rent Allowance (HRA) (Comes in handy if you're paying hefty rents in metros)</li><li>Interest on housing loan (on self-occupied property or vacant property)</li><li>Own contribution to NPS (If there's any)</li><li>Interest earned on savings bank A/Cs </li><li>Investments made in ELSS, PPF</li><li>Premiums paid towards life, health insurance policies</li></ul>As for the deductions that are allowed, that makes for a pretty small list: <ul><li>Transport allowances (only if you are specially abled)</li><li>Gifts of up to Rs 50,000</li><li>Employer’s contribution to your NPS account</li><li>Interest paid on home loan only on let-out property</li></ul>But that's the trade-off. You get to pay taxes at low rates, yes, but you also don't get to claim a whole lot other deductions. Notes CA Nitesh Buddhadev, "Which regime is beneficial for you depends upon the allowances and deduction available to you during a relevant financial year. So, if your total income from salary is Rs 10.5 lakh and if the aggregate of any of the deductions / allowances you can claim is less than Rs. 3.15 lakh, you should opt for the new tax regime. If you have not invested in multiple tax-savings scheme, the new regime will work better. So, don't make this decision in any haste. You can choose your tax regime only once in a financial year. And if your income from business or other professions, be even more careful, because this will then become a once in a lifetime choice for you (quite literally!). So, take a good hard look at your finances, and then decide what works best for you!

Confused about the new tax regime? Here's when you should opt for it

<ul class="summary-list"><li>Business Insider spoke to over 40 baby boomers in recent months, many of whom are struggling to retire.</li><li>They're disappointed that Social Security isn't helping them stay out of poverty in their post-work years.</li></ul><a target="_blank" href="https://www.businessinsider.com/boomer-living-on-social-security-retirement-savings-401k-bus-driver-2024-7">Emma Echols</a> has worked since she was 12 as a babysitter, chef, and convenience store manager.The 68-year-old should be preparing for retirement, but she believes she'll have to <a target="_blank" class="" href="https://www.businessinsider.com/retirement-crisis-social-security-pensions-student-loan-debt-2024-3">work for the rest of her life</a>.Echols lives in Alabama. She said she never made much money and has always lived frugally, but her rent and transportation alone cost her $1,000 monthly. She started <a target="_blank" class="" href="https://www.businessinsider.com/social-security-no-savings-snap-benefits-debt-boomers-experiences-2024-6">taking Social Security early</a> and receives $1,056 monthly — 25% less than she would have gotten had she waited until the federal retirement age of 67.But she's still working part-time as a bus driver making $26 per hour to pay the rest of her bills."I don't see myself being able to retire, but I'm grateful and healthy," she said.<a target="_blank" class="" href="https://www.businessinsider.com/boomer-lives-social-security-struggles-afford-grocery-bills-rent-retirement-2024-8">She's not alone:</a> According to a <a target="_blank" class="" href="https://www.nerdwallet.com/article/insurance/medicare/2024-medicare-and-retirement-report">NerdWallet study</a> published last week of 2,100 adults, just 30% of respondents said they believe Social Security alone will allow them to live comfortably in retirement.Over the past few months, Business Insider has spoken with over 40 baby boomers and some Gen Xers, all of whom are struggling in retirement or <a target="_blank" href="https://www.businessinsider.com/boomer-social-security-cant-afford-groceries-feels-lonely-retirement-2024-7">fear they can't retire</a> because debt, low-paying jobs, and unexpected life circumstances have kept them from saving enough over the years. Though many say they are thankful to have Social Security payments at all, they aren't enough to fill the gap.Social Security is supposed to be American retirees' safety net, but as it continually <a target="_blank" href="https://www.businessinsider.com/when-will-social-security-benefits-run-out-retirement-crisis-boomers-2024-5">lands in political crosshairs,</a> it might seem like a less safe bet than ever before. Full benefits are set to <a target="_blank" href="https://www.businessinsider.com/when-will-social-security-benefits-run-out-retirement-crisis-boomers-2024-5">run out in 11 years</a> unless Congress steps in with an infusion of funding."There's just a lot of people who expect Social Security to be a really important piece to their post-work life," Tracey Gronniger, managing director of economic security for the advocacy organization Justice in Aging, said.Even with the current full benefits, some baby boomers are forced to continue working into their 70s and 80s, while retirees worry they may have to return to a part-time gig. Others said they're considering moving out of the country for a lower cost of living or moving in with their children."At this point in my life, my expectations are very low," said <a target="_blank" href="https://www.businessinsider.com/peak-boomer-retirement-affordable-housing-rent-california-alice-food-stamps-2024-5">Cheryl Simmons</a>, 62, who lives in her car in San Diego and makes $42,000 a year as a parking lot attendant — slightly too much to qualify for affordable housing. "I'll have to work until I drop."<h2 id="42ec9f61-b6ed-4191-abf8-5155a510a607">Social Security varies by age and income, but the average monthly check is $1,907</h2>Social Security, created in 1935, was implemented during the Great Depression to assist the <a target="_blank" class="" href="https://www.ssa.gov/history/briefhistory3.html">more than half</a> of Americans in poverty, including older workers looking to retire."There is no tragedy in growing old, but there is tragedy in growing old without means of support," President Franklin D. Roosevelt said in a <a target="_blank" class="" href="https://www.ssa.gov/history/locations.html#:~:text=Old%20age%20is%20at%20once,without%20means%20of%20support.%20.%20.">1934 address</a>.Social Security benefits are <a target="_blank" href="https://www.ssa.gov/OACT/COLA/Benefits.html">based on a worker's average monthly income</a> during their 35 highest-earning years, adjusted for inflation.For example, an American earning an average income of about $66,000 who retires at 65 will have 39% of that annual income replaced by Social Security, according to <a target="_blank" href="https://www.ssa.gov/OACT/NOTES/ran9/an2024-9.pdf">SSA estimates</a>. This compares to an average <a target="_blank" class="" href="https://www.oecd-ilibrary.org/docserver/5df7712d-en.pdf?expires=1724266845&amp;id=id&amp;accname=guest&amp;checksum=2527F54D46AE1A4C399BE99BBB46A640#:~:text=Full%2Dcareer%20male%20workers%20will,slightly%20lower%2C%20at%2050.1%25.">income replacement rate</a> of slightly over 50% in OECD countries — and nearly 80% in Spain and Greece.Americans can begin claiming Social Security at age 62 — but their monthly amount is often higher if they wait longer to collect benefits. In 2024, the <a target="_blank" href="https://www.businessinsider.com/personal-finance/investing/what-is-social-security">maximum monthly benefit</a> is $3,822 for those claiming the benefit before turning 70; for those claiming the benefit at age 70, the maximum benefit is $4,873. However, the average monthly check is much lower: $1,907.An annual income of just under $23,000 doesn't go far in the US today. While Social Security was never meant to promise a life of luxury — and is ideally combined with savings and other investments — the baby boomers BI spoke to have struggled to save much at all because life events and low wages got in the way.Some are part of the one in five older Americans who have <a target="_blank" class="" href="https://www.businessinsider.com/gen-x-baby-boomers-savings-cant-afford-retirement-2024-4">no retirement savings</a> at all. Experts say you can partially blame the US' <a target="_blank" class="" href="https://www.businessinsider.com/retirement-social-security-gen-z-millennials-uncertainty-fears-pensions-2024-4">switch to 401(k) accounts from pensions</a> in the 1980s, which largely replaced guaranteed retirement payouts funded by employers with investment plans that require employees to opt in and provide the bulk of their savings.While many employers do offer 401(k) matches to their employees, the amount can vary greatly between companies. And, because participation and employer matches are voluntary — and income-based — this opt-in system can cut down on employees' retirement savings and lead to even <a target="_blank" class="" href="https://mitsloan.mit.edu/ideas-made-to-matter/how-retirement-saving-incentives-amplify-wealth-gaps-u-s">greater income inequality</a>.To help pay the bills, nearly 80% of retirees receive some Social Security income, per BI's calculations, and the Social Security Administration estimates that 97% of older adults will ultimately receive benefits.Social Security indeed helps older Americans <a target="_blank" class="" href="https://www.cbpp.org/research/social-security/social-security-lifts-more-people-above-the-poverty-line-than-any-other">escape the technical definition of poverty</a>. However, the official poverty line is based on a formula from the 1960s, a measurement that <a target="_blank" href="https://www.businessinsider.com/poverty-line-leaves-behind-low-income-americans-snap-medicare-wic-2024-6">experts previously told BI</a> is outdated and leaves many to fall through the cracks between needing help and making too much to qualify for assistance.The baby boomers BI spoke with are not part of the group who have myriad investments, high-paying careers, or strong 401(k) employer matches. They are retired teachers, rideshare drivers, food service and retail workers; some live in a car or can't afford groceries — and they certainly feel like they are living in poverty.Others, however, have minimal expenses and <a target="_blank" href="https://www.businessinsider.com/boomer-lives-on-social-security-works-walmart-retirement-savings-2024-7">live in low-cost-of-living areas</a>, allowing them to live comfortably on Social Security alone.Those who are already living check to check said they've been forced to drain savings accounts because their income isn't enough to cover medical bills and unexpected expenses. And, with limited Social Security money, some boomers are forced to enroll in other government assistance <a target="_blank" href="https://www.businessinsider.com/buying-groceries-snap-food-stamps-cant-afford-essentials-credit-card-2024-6">programs like SNAP</a> to put food on the table or return to work after retirement.<a target="_blank" class="" href="https://www.businessinsider.com/boomer-couple-lives-social-security-snap-no-retirement-savings-2024-6">Mary Dacus</a>, 62, and her husband Stephen, 67, live in Robinson, Illinois, on their combined $2,140 monthly Social Security income and $23 a month in SNAP. They've racked up thousands of dollars in credit card debt to pay for groceries, utilities, and healthcare. They feel like it's their only way to survive."A lot of people think that, with Social Security, you get this big check, and you can move to Florida, and you could buy a boat and go fishing," she said. "That's not what it is."<a target="_blank" href="https://www.businessinsider.com/retirement-social-security-peak-boomer-alaska-medical-expenses-financial-insecurity-2024-8">Becky Davenport</a>, 61, works at a nonprofit outside Anchorage, a high-cost-of-living area. She told BI that her expected $2,000 monthly Social Security payments may not be enough. The single mom fears she may need to move in with her sons or find a roommate. Medical costs, housing expenses, and transportation have all chipped away at her savings."I usually had more money going out than coming in," Davenport said. "I was kind of a master at juggling bills. I had some credit cards that I used for emergencies and ended up defaulting on all of those. I just managed to scratch out a living and keep a roof over my kids' heads."<h2 id="65730406-dd92-418b-963e-a6e4f447db7f">Social Security solutions could include raising earnings caps and improving funding</h2>With a presidential election coming up, Social Security is likely to be in the hot seat once again.While Social Security is costly — <a target="_blank" href="https://www.cbpp.org/research/federal-budget/where-do-our-federal-tax-dollars-go#:~:text=Social%20Security:%20In%202023%2C%2021,to%2049.1%20million%20retired%20workers.">it amounted to 21% of the federal budget in 2023</a> — it's widely popular. Polling has consistently shown bipartisan support for the program; a <a target="_blank" href="https://www.pewresearch.org/politics/2024/06/24/americans-views-of-government-aid-to-poor-role-in-health-care-and-social-security/">Pew Research Center poll</a> of 8,709 adults in April 2024 found that almost every group thinks Social Security benefits should not be reduced. That includes 77% of Republicans and 83% of Democrats.Already, former president and current Republican nominee Donald Trump has proposed cutting taxes on benefits — a measure that an economist said could <a target="_blank" href="https://www.businessinsider.com/trumps-tax-plan-social-security-retirement-medicare-2024-8">actually drain the program's coffers faster</a>.Senators Bernie Sanders and Elizabeth Warren, along with fellow Democrats, have <a target="_blank" href="https://www.businessinsider.com/sanders-warren-bigger-social-security-checks-medicare-retirement-biden-2023-2">proposed raising the earnings cap for Social Security taxes</a> to offset hiking benefits by $2,400 a year. Currently, only <a target="_blank" class="" href="https://www.ssa.gov/benefits/retirement/planner/maxtax.html">income up to $168,600</a> is subject to Social Security tax, with income beyond that untaxed. On the other hand, some House Republicans <a target="_blank" href="https://www.businessinsider.com/social-security-benefits-republicans-raise-age-retirement-cuts-2024-3">have proposed</a> hiking the eligibility age for the program.Those proposals come against the backdrop of already-dwindling funding."We really want to see a more robust Social Security system," Gronniger said. Already, she said, the program is lifting millions of adults out of poverty — but, with a very low poverty line in the US, that's "not saying a ton.""We could do a lot more because I think what we want is for people to actually have real economic security and so feel as though they can afford the things not only that they need, but that people should have," Gronniger said. "You shouldn't be worrying about whether or not you can pay for all of your food and all of your medicine and all of your housing."But the dire straits older Americans have found themselves in, even with Social Security, point at a larger issue that might only get exacerbated: Retirement is becoming a luxury. As pensions dissipate and only higher-earning retirees have savings, Social Security might only become more pivotal for retirees. And that's already not working so well."I don't want to be rich, I just need to be comfortable," 62-year-old Angela Babin — who lives on her <a target="_blank" href="https://www.businessinsider.com/boomer-social-security-checks-snap-food-stamps-cant-afford-food-2024-6">$1,100 monthly Social Security check</a> — told BI. "I just want to know that I can have food when I need it and a nice roof over my head."Are you living check to check on Social Security? Have you experienced loneliness because of your finances? If so, reach out to these reporters at <a target="_blank" class="" href="mailto:allisonkelly@businessinsider.com">allisonkelly@businessinsider.com</a>, <a target="_blank" href="mailto:nsheidlower@insider.com">nsheidlower@businessinsider.com</a>, and <a target="_blank" href="mailto:jkaplan@insider.com">jkaplan@businessinsider.com</a>.

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