Proposals to Change Social Security and Medicare

The total cost of Social Security will exceed its income resources this year for the first time since 1982. For now, trustees expect current taxes, interest income on reserves and trust fund asset reserves to provide the funding necessary for both Social Security and Medicare. However, trust fund reserves are projected tobe depleted at the end of 2034 — just 16 years from now. At that time, assuming no legislative action, it is estimated that Social Security would be able to pay 75 percent of scheduled benefits.

There hasn’t been much movement on this issue since the 115th Congress convened in January 2017. This June, Sen. Bernie Sanders (I-VT) introduced the Social Security Administration Fairness Act, which proposed eliminating the monthslong waiting period for disabled worker benefits for both Social Security and Medicare coverage. Sen. Ron Wyden (D-OR) introduced the Elder Poverty Relief Act, this April, which proposed authorizing an additional monthly benefit of approximately $85 for 2019, with subsequent increases based on the national average wageindexing (AWI) series.However, neither piece of legislation has passed committee review.

House Republicans have drafted a proposal designed to balance the budget in nine years by making large cuts to entitlement programs. Recommendations include offering retirees the option to enroll in private Medicare plans that compete with traditional Medicare. The plan also features a $4 billion cut from the Social Security budget spread over 10 years.

If you have questions about how Social Security or Medicare might affect your retirement income strategy, don’t hesitate to give our office a call

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Social Security Strategies for Retiremen

Planning when and how to claim Social Security benefits is as personal as an individual investment strategy. Several factors should be considered, such as your life expectancy, how long you expect to work, income potentially produced by other assets, how many individuals your benefits must support and how much you expect your retirement lifestyle to cost annually.

These decisions are best discussed with an experienced financial advisor to help you determine the appropriate Social Security benefit strategy for your situation. We’re always here to help when you have any questions. The following are some basic strategies you may wish to consider as you develop your Social Security plan.

Claim Early

If you suffer from health problems and/or have a family history of shorter lifespans, you may want to claim Social Security benefits early. The earliest you may begin claiming them is at age 62.

Work Longer

Benefits are determined based on your 35 highest-earning working years. If you had lower income for many of those years but are earning significant income now, you may wish to work longer to include these higher-earning years in your benefit calculation.

Work Even Longe

People who enjoy their job, remain in good health and see no reason to retire earliermay accrue a significantly higher benefit by delaying Social Security until age 70. In fact, delaying benefits past normal retirement age(66 or 67, depending on when you were born) allows them to increase by up to 8 percent each year. By delaying until age 70, you could receiveup to approximately 132 percent of the benefits you qualified for at your full retirement age.Note that your benefit earns delayed credits even if you stop working earlier and live off your own assets until age 70.

Planning Tip

Criteria for Retirement Benefits

Applicants must earn a certain number of credits to qualify for Social Security benefits.

  • Most people need a minimum of 40 credits to qualify for Social Security benefits.
  • If you don’t have 40 credits, you may qualify for additional earnings credits for time worked in another country.
  • If you do not have enough credits based on your own work record, you may be entitled to benefits based on the work record of a current or former spouse.
  • Your monthly benefit is determined by average earnings throughout your working years.
  • The amount of your benefit also will depend on your age when you apply.
  • Content prepared by Kara Stefan Communications.

    Our firm is not affiliated with the U.S. government or any governmental agency.
    1 Aimee Picchi. CBS News. June 5, 2018. “Social Security says system’s costs will exceed income this year.” https://www.cbsnews.com/news/social-security-says-costs-will-exceed-income-this-year/. Access Sept. 10, 2018. 2Social Security Administration. “Proposals Affecting Trust Fund Solvency.” https://www.ssa.gov/oact/solvency/. Accessed Aug. 21, 2018.
    3 Ibid.
    4 Erica Werner. The Washington Post. June 19, 2018. “House GOP plan would cut Medicare, Medicaid to balance budget.” https://www.washingtonpost.com/news/business/wp/2018/06/19/house-gop-plan-would-cut-medicare-social-security-to-balance-budget/?utm_term=.715263cfe64a. Accessed Aug. 21, 2018.

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