Retirement and Healthcare Dollars and Sense: A work in progress…
WASHINGTON — As more and more Baby Boomers face retirement, people often want to know more about it. It is not an easy subject to address as our government is involved. But enough said. Let’s talk retirement and healthcare dollars and sense.
To get in the mood, think about filing income taxes and all the many forms, rules and regulations involved with that. You’ll begin to get an idea about what the process of retiring will involve for you, personally. Ditto when it comes to Medicare healthcare benefits. To get an experienced overview, the best initial advice on approaching this topic: lean in on some older family members and friends who have gone through this before you.
Now, let us begin here by reviewing an old adage that holds, “You work 40 hours per week for 40 years of your life and you get to retire at 40% of your last year’s rate of income.” Now forget all that.
Ready for retirement? (How do you stack up?!)
An average American will have $65,000 in his or her bank account as a retirement fund of cash assets.
The average American income right now for women is $42,238 while men earn $52,004.
An average American family’s net worth (2 incomes household) is $746,820. This number generally includes a house, cars and all personal possessions.
What about Social Security retirement benefits as income?
The average monthly Social Security benefit at my age _____ is ______:
66: $1,489 Full Retirement Age (FRA) Right Now for Those born between 1943 and 1954.
A sliding scale
Right now, depending on your birthdate, full retirement age after DOBs from 1955-1960 is age 66. The full retirement age then increases gradually in 2 month increments from those born 1955 to 1959. For anyone born 1960 or later, full retirement benefits are payable at age 67. (Expect numbers to eventually change again in the future for younger Americans who are likely to live longer than those retiring now or soon.)
The minimum Social Security benefit payment is currently $872.50 per month. That assumes you made at least $15,000 before retirement. This minimum amount is called a Federal Poverty Level (FPL) amount.
One more thing: You must work for at least for 40 calendar quarters or 10 years to qualify for any kind of Social Security benefits.
Another thing people want to know: What is the best age to retire?
When it comes to calculating the best age for starting to collect your monthly Social Security benefits, no one-size-fits-all answer exists. Currently, most people retire around age 66 to draw full Social Security benefits at their full Retirement Age (FRA) at this moment. Others begin to take their retirement at 62, often due to pressing economic concerns. But, as a rule, it’s best to delay retirement if you can to max out your benefits.
If you’re in good health, consider waiting to begin collecting Social Security until age 70. You’ll benefit from the highest possible Social Security payout. The number is not inconsiderable. Currently, it’s 132% of your prorated full retirement amount after reaching the 100% level at your full retirement age. Waiting until after you’re 70, however, does not generally extend this advantage further.
People also ask, “Can I retire and still work full-time?”
You can work as much as you like and still receive your full Social Security retirement benefits. But with conditions.
For example: If you’re 62 or older but below your full retirement age, the government withholds $1 in SS benefits for every $2 you earn above the annual income threshold set by Social Security. For 2021 that earnings limit is $18,960. In other words, if you make more money than that in 2021, Social Security imposes a 50% penalty in benefits for every dollar you exceed that amount.
What about Medicare Healthcare Insurance?
Medicare healthcare benefits operate under a different set of rules, but they are available beginning at age 65. Most people sign up for Medicare Part A and B plans at the time of retirement when their employer health care insurance ceases. For most Americans, enrolling in Medicare is effectively a requirement.
Further, depending on your current medical insurance situation at age 65, you may incur penalties if you don’t sign up for Medicare at that age. But be absolutely sure to check with your HR director — well in advance of your 65th birthday — for how this works if you remain under your company’s healthcare insurance program. Planning your transition to a Medicare healthcare plan early in the game will give you peace of mind when it’s time to make your decision. And various employers have various ways of working with you on this transition.
What about all those Medicare “parts”?
Medicare Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care.Part B covers certain doctors’ services, outpatient care, medical supplies, and preventive services.
Some individuals also sign up for Medicare Part D, a prescription drug benefit that went into effect during the Bush II administration. Part D helps cover the costs of prescription drugs (including many recommended shots or vaccines). Choosing this option up front when you enroll in Medicare is highly recommended under most circumstances. That’s because choosing it later on may incur financial penalties.
The Medicare Income-Related Monthly Adjustment Amount (IRMAA) is an amount you may have to pay in addition to your Part B or Part D premium if your income is above a certain level.
Can I refuse Medicare Parts A and B?
You can’t opt out of Medicare Parts A & B and continue to receive Social Security retirement benefits. This is generally not done and is not considered a wise move unless you are independently wealthy and self-insured or insured by a commercial carrier.
Can I use my Social Security Retirement Benefits to pay for Medicare Parts A and B?
In general, Social Security deducts your monthly Medicare healthcare premiums and pays them directly to Medicare. If you begin Medicare healthcare benefits at 65 but prior to retiring on Social Security, however, you’ll be responsible for paying your own Medicare premiums until such time as you elect to take your Social Security benefits.
After retirement, if your retirement benefits do not cover the cost of your Medicare healthcare premiums, Medicare bills you an additional amount near the end of the year. Assistance is offered for those who cannot make these premium payments in the form of Medicaid.
What is Medicare Supplement insurance
Medicare Plan F (also known as Medigap Plan F) is the most comprehensive Medicare Supplement plan. This plan covers Medicare deductibles and all copays and coinsurance, which means you pay nothing out of pocket throughout the year for doctor visits. This is provided by a private sector insurance carrier and not Medicare itself. Supplemental plans most often are purchased so Medicare enrollees do not lose their homes due to a catastrophic illness such as open heart surgery.
What is Medicare Advantage?
An increasingly popular Medicare plan that involves an outside insurance company effectively managing your coverage is known as a Medicare Advantage plan. It’s generally designated as “Medicare Part C.” It includes Medicare Parts A and B and often Part D as well. It may include other extras not covered under regular Medicare, including vision and dental plans. But be sure to check. Medicare Advantage pricing is higher than plain vanilla Medicare Parts A & B depending on the level of coverage you choose. But in return, your coverage, depending on the you choose (there are many in each state) gets you much closer to the coverage you may have had under your employer’s insurance package.
An added bonus in most Medicare Advantage Plan: your coverage is extended to include emergencies and treatment when you’re on foreign travel, something Medicare doesn’t currently cover. But again, check details when choosing one of these plans.
How much do Medicare Parts A and B cost in premiums?
You pay for Medicare healthcare premiums based on your income level when you retire. This can be adjusted (up or down) based on your income tax filings thereafter. Using an average income of $45,000 when a person retired, Part A would be $471 each month, Part B would be $148.50 per month and Part D would be approximately $33 per month. But many retirees do not have to pay for Part A, so again, this is something you need to check into in advance of signing up.
As Medicare.Gov notes: “There is a Golden Window of when you need to sign up for Medicare. If you’re eligible for Medicare when you turn 65, you can sign up during the 7-month period that: Begins 3 months before the month you turn 65. Includes the month you turn 65. Ends 3 months after the month you turn 65.”
When do I sign up for or elect to change my Medicare healthcare coverage?
Also, there are certain times of the year when you can sign up or change how you get your coverage.
1. If you sign up for Medicare when you’re first eligible, you can avoid a penalty.
2. You can choose how you get your Medicare coverage.
3. You may be able to get help with your Medicare costs.
What about such things as 401(K), 403(B) and IRA accounts?
These vary so widely you need to check with your individual financial advisors. He or she can help you determine the best manner and timing to draw from these types of retirement accounts. Again, one size does not fit all. The wide variety of such accounts does not allow for a simple answer. Some of these accounts are tax sheltered and some are not.
What if I want to draw money out of a pension system?
Depending on how much you may receive, this strategy could reduce the amount Social Security pays you in an Income-Related Monthly Adjustment Amount (IRMAA) mentioned previously.
Will I be forced into taking Public Aid in retirement?
In some cases, this may hold true. That is nothing to fear and nothing to feel bad about. The costs of retirement can go up and annual cost of living adjustments (COLAs) do not always keep up with inflation. Right now, we we may face another period of high inflation.
In the end, you need to apply some good common sense before you retire depending on your own situation. Attending community classes and workshops at local colleges and libraries is a good idea. Increasingly, associations like AARP offer some in-person and online programs in this area as well. Sometimes, local church groups and area newspapers host seminars on preparing for retirement. You can find some good videos and other useful nformation online as well.
How long do American men and women live these days?
As of 2019, American men live for an average of 76.3 years. American women average 81.4 years of life. These rates have slowly risen in recent decades. But the recent COVID pandemic may change these numbers — possibly for the worse — in future calculations.
How can I learn more about this whole process?
Should you conduct retirement business and transactions in person, online, or on the phone?
Many people conduct their initial declaration of retirement and SS filings in person. But phone consultations grew in popularity during the COVID pandemic as offices were shut down to in-person visits. The people in both of these agencies are extremely nice and helpful. But wait times on the phone can be lengthy.
I am not a doctor, a financial expert, an insurance agent, or Federal Government employee. What this article covers includes what I learned between age 62 to age 66 when I fully retired. This is the path I needed to take. Your path could prove very different. My original plan was to work part-time in a factory to age 70 doing what I taught others to do for 40 years, namely CAD-CAM. Then COVID-19 came along and forced me into retirement at age 66. Use this article as a springboard to begin your own research and chart your own course into retirement. CDN and I make no warranties, either expressed or implied, relative to the fitness of this information for any particular person or purpose. DO YOUR OWN RESEARCH AS THIS INFORMATION WILL CHANGE OVER TIME!
About the author:
Mark Schwendau is a Christian conservative patriot and retired technology professor (CAD-CAM and web development). He prides himself on his critical thinking ability. Schwendau has had a long sideline of newspaper editorial writing where he used the byline, “- bringing little known facts to people who simply want to know the truth.” Mark is on alternative free speech social media platforms after lifetime bans from Facebook and Twitter and shadow bans from Instagram and Fox News commenting.
His website is www.IDrawIWrite.Tech
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