For most of us, regardless of what other assets we have to fund our retirement, Social Security and Medicare still play a role in our plans. Given that, what are some of the basics and common misconceptions that we should understand about these...
For most of us, regardless of what other assets we have to fund our retirement, Social Security and Medicare still play a role in our plans. Given that, what are some of the basics and common misconceptions that we should understand about these programs? That’s the discussion that Vince has with Maryann Keith, COO and Investment Strategist with Beden Wealth Management, on this episode of CFO at Home.
- Social Security Retirement Benefits
- When can you collect
- If you’re collecting off your own work record you can start collecting as early as age 62
- If you delay until you reach Full Retirement Age (FRA) you will get a larger monthly benefit (for those born in 1960 or later, FRA is currently 67)
- Payout amount goes up 5% for each year you delay collecting the benefit between ages 62 and 67
- If you delay the age you start collecting from age 67 to age 70, the benefit goes up another 24%
- If you collect Social Security prior to age 67 your payments are subject to a “Earnings Test”, meaning that if your income is more than $19.5K, your benefit is decreased
- If you lost a spouse you can collect survivor benefits - age 60
- The role of Social Security benefits in a retirement plan
- In the past, Social Security was considered to be one leg of the “three-legged stool” of retirement (along with personal savings and pensions). With pensions becoming a thing of the past the model has changed.
- Medicare enrollment eligibility starts at age 65
- Part A - Hospitalization - prepaid during working years
- Part B - Things outside of hospitalization (doctor’s appointments, physicals, etc) - extra charge
- Part D - Prescription Coverage - extra charge
- Pact C - Medicare Advantage
- Premiums are income based
- Because Medicare eligibility doesn’t start until age 65, dealing with medical costs can be an issue for those who want to retire early
- Medicare covers all medical expenses once they reach 65 (false!)
- Medicare covers Nursing Home costs (false!)
- Long Term Care insurance can also play a major role in retirement healthcare, but finding affordable options can be challenging
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