This blog summarizes the information and discussion shared at a recent InspireHer event at Plancorp’s office by Senior Wealth Manager, Jessie Weiss. If you are interested in learning more about the InspireHer mission to inspire financial confidence among women or to sign up receive updates about upcoming events, click here.
Social Security Retirement Benefits & Surviving Family Benefits
Social Security is something we’ve all been thinking about since the deduction from our first paycheck. As we near being eligible to sign up for benefit payments, reviewing the rules about how those payments are calculated for different circumstances and ages is important. A Plancorp wealth management team member can customize a conversation with you to help decide what works best for your situation.
Age is related to amounts: Earlier is lower, later is higher.
Applying for Social Security as early as age 62 is possible but also associated with a drastic reduction in lifelong benefits. Plus, you may face a potential reduction of benefits in the months you are still working when taking Social Security before your Full Retirement Age (based on the year of your birth or 67 for most workers).
Social Security monthly benefit payment amounts increase the longer you delay applying for benefits, up to a maximum benefit at age 70 years old. Each year you delay after your Full Retirement Age adds an additional 8% per year!
Marriage adds options: Couples or individuals that have been married in the past have a few additional strategies to consider, such as the options to receive 50% of a spouse’s benefit if higher than your own working history benefit, apply for benefits from a former spouse’s working history, or the options for a surviving widow(er).
Pensions add complications: Pension plans can also come into play when determining a final Social Security benefit, your own or one based on a deceased spouse. These windfall provisions act to reduce the monthly benefit if you have a significant work history with an organization that provides a separate pension and was not withholding Social Security taxes from your paycheck.
Benefits for minors: When someone passes away with minor children still in the household, Social Security survivor benefits may be available for a period based on the ages of the children (based on the deceased parent’s working history) to the surviving parent and each child. Disability benefits are also available to both minor children and adults before reaching eligibility for a traditional retirement benefit.
Medicare is an important resource for those turning 65, especially if not in the workforce and lacking health care insurance benefits typically available through employment or a spouse’s employment.
Myths about Medicare: Many myths are associated with Medicare that can be confusing, such as the need to apply immediately when you turn 65 or face a penalty. If still covered by a credible health plan (through your own employer or a spouse’s employer), no penalties will apply until the loss of that coverage regardless of age. Many individuals that reach their 65th birthday may want to keep working or may need to provide health insurance for a nonworking spouse or minor children for a few more years.
Medicare is solo coverage: For married couples, each person needs to be 65 to receive Medicare benefits. Unlike health insurance available from an employer that covers family members, Medicare is an individual policy for each eligible person and is never a joint policy.
Medicare costs can vary: Medicare premiums and deductibles baselines are initially established by the federal government. Another surprise retirees have is a means test for an additional premium, based on your income from 2 years ago. Essentially if a household has higher income, Medicare Part B and supplement plans will cost more each month.
Making changes to Medicare: Part D is easy, but Supplement or Advantage changes might be harder or more expensive. Part D plans for prescription drugs can be reevaluated (and should be reevaluated) every late Fall (10/15-12/7) to determine the best combination of insurance plan and pharmacy to save you money based on your needs. The ability to change a Supplement or Advantage plan is possible too, but you should try to make your best selection at enrollment to avoid any health questions that could raise premiums with a future change.
Remember: Every season is the right season to learn more about personal money management, for you and the important people in your life. Please join in the fun at a future event! The InspireHer Initiative is a Plancorp program focused on women and their most pressing questions or concerns. Check out more resources at https://www.plancorp.com/inspireher/.