Give a little, take a little. What goes up must go down. Social Security payments increased in 2022 but what about that medicare premium. All you hear is about the great increase Social Security recipients will receive and nothing about the increase in Medicare. I was talking to a friend who was touting how much he will have in his increase. I asked him if he was aware of the hefty increase in Medicare. He was not aware and now has to recalculate his benefit.
This increase was to help catch up not take into consideration current or future inflation. Since inflation, in general, is about the same as the increase, beneficiaries are going backward. When you deduct the additional cost of Medicare, the net benefit is less than inflation. The cost for Medicare hits lower-income/beneficiaries harder because the cost is the same for everyone.
It depends upon how you look at the whole Social Security/Medicare thing. In one sense, costs for medical care have increased and it makes sense that we should pay for the increases. On the other hand, individuals with a lower benefit (not ones who decided to take it at 62) but those who have taken it at full retirement will pay a higher percentage. Medicare’s cost can be considered “regressive” but in the case of Medicare, the cost to treat a person is not based upon their benefit.
Time to create your on line account with Social Security
The best place to get real information about benefits is at the Social Security site by clicking here. I was informed about a friend of a relative who thought he was going to receive over $4,600 per month when he turned 62. Well, that’s not going to happen. He read something from somewhere about his benefit. I told my friend to pass along that he should go to the website and determine exactly what he would get at any retirement age.
The site also has information about the increase in January 2022. You know that Medicare is not part of Social Security, right? Most people don’t know that so they will have to look around for info about medicare. Social Security deducts the Medicare payment but they are two different groups in the U.S. Government. Go to the Medicare Site here.
Hold on to your seat. The Medicare increase is 14.5% over last year and is now up to $170.10 per month. Even this increase is not keeping up with the increased cost of medical care. The 2021 rate for Medicare is $148 so the increase is $22.10 per month.
Percent of your Social Security going to Medicare
If you are earning about $1,600 per month which is generally considered the average benefit earned, Medicare represents 10.6% of your total Security Benefit. If you are earning $3,000 per month on the higher side of the full retirement benefit, your cost is 5.6%. You can see why waiting to draw your benefit until you are 66-70 makes better sense on a straight economic basis. Every situation is different and you need to assess your health etc. If you can wait, it’s better.
Another thing that most people about to retire or just retire find out when they do their taxes is that 80% of the benefit is taxable depending upon your gross income for that year. You may ask why you are paying taxes on money that you already paid taxes on. Good question, perhaps the elected officials who passed that law can explain it.
If you are considering what to do about retirement and you are in the planning stages, understand that Social Security is a safety net. It was never designed to be “the” main support for people. Yet, so many never planned, they just kept up their lifestyle without regard to retirement then find that Social Security is not sufficient to sustain them.
Your rent in 2022 is $2,000 per month what about 2032/2042
Many people do not earn enough from Social Security to pay their monthly rent payments. Consider when that payment which started at $2,000 goes to $3,000 or $4,000 per month in out years. Ok, there are two of you so perhaps you can squeak by. What happens when, not if, but when one passes. How will you survive?
The point that I am trying to make for anyone reading this is to plan. Give up some of the pleasures today so that you can enjoy your later years. It takes discipline and planning. I have written other articles about this topic on this blog site you may want to explore.
