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Social Security Planning

Social Security Planning

Social Security and Medicare are faced with declining revenues and increasing expenses. Now, more than ever, it is up to the individual American to be proactive in saving for retirement. It is highly unlikely that Social Security or Medicare would be abolished. The programs will be “tweaked and tuned” by Congress to ensure sustainability. The potential tweaking and tunings are well known: delay age for eligibility, increase tax rate, increase wages subject to taxes, change benefit calculation, change taxability of benefits.

Some basics on Social Security and Medicare:

  • Eligibility for Social Security benefits varies with one’s birth date.
    • Full benefits between ages 65 and 67 dependent on birth year.
    • Reduced benefits available at age 62.
    • Increased benefits available by delaying benefits to age 70
    • Average benefit in 2018 is $1,404 per month.
  • Determining when to apply for benefits.
    • Individual circumstances are unique.
    • Factors to consider: family longevity history, personal health, marital status, spouse health, availability of other assets, plans for part time work.
  • Make a financial plan for your retirement
    • Estimate your retirement expenses.
    • Catalogue available resources for retirement
    • Determine priority order of accessing catalogued retirement assets
    • Calibrate the rate at which to draw down the retirement assets
    • Consider Long term Care Insurance, Medicare provides very limited financial assistance for long term care costs.
  • Eligibility for Medicare
    • Age 65
    • Must enroll for benefits 3 months before but not later than 3 months after birthday month.
    • Filing later then the noted period results in increased premiums.

Planning for retirement is daunting, but “failing to plan is planning to fail” and no one wants to fail in retirement. Take action!