Planning for Social Security? Don’t forget the Government Regulations
Planning for Social Security? Don’t forget the government regulations.
Form many Social Security benefits will be a good chuck of their income in retirement, but please consider that any benefit received must also cover the bulk of Medicare premiums.
The relationship between Medicare and Social Security:
- The Social Security cost of living adjustment (COLA) is projected inflate by 2.6%.
- Medicare premiums, historically, have inflated at over 7.5%.
Below is a chart illustrating the relationship between Medicare and the Social Security COLA:
Thankfully, there is the Hold Harmless Act which ensures that retirees never see a reduction in Social Security benefits due to “too high” of Medicare Part B premiums, but even with this Social Security benefits will never really keep up with the rate of inflation.
An example of what to expect from your Social Security benefit:
Person A is 55 years old, plans on retiring at age 67, will be fully insured with a Medigap Plan G policy and has earned, on average, $60,000 in wages through employment.
Relying on Social Security to supplement income in retirement is no longer an option. Due to Medicare premiums inflating, on average, by twice as much as Social Security’s COLA this benefit may never grow.
The time to plan for and generate another form of income in retirement is now.