Social Security and Medicare are government run programs that aim to meet insurance and medical needs for U.S. citizens that have reached their retirement years.
At Benchmark Financial, we sit down with you to have a conversation centered on social security, medicare, and its benefits. One of the first tasks for us to accomplish will be to analyze your entire portfolio and life situation. This will help outline an optimal strategy to make sure your social security is benefiting you as it should.
Basic Benefits
Medicare Part A helps pay for bills related to inpatient hospital stays, skilled nursing facility care, inpatient care in a skilled nursing facility, hospice care, and home health care.
Medicare Part B is optional and pays a portion of nonhospital-provided medical care, such as doctor visits and other outpatient services.
Medicare Part C, or Medicare Advantage is different from Part A and Part B because it is not provided through the federal government. Instead, it is offered by private insurance companies.
Medicare Part D is a prescription drug benefit program that is offered as part of the broader Medicare federal health insurance program. Part D is an optional benefit that is administered by private insurance companies.
Medigap, also called Medicare Supplement Insurance, is health insurance coverage provided by private companies designed to pay for costs not covered by Original Medicare.
To qualify for Social Security retirement benefits, workers must be at least 62 years old and have paid into the system for 10 years or more (40 quarters).
Workers who wait to collect Social Security, up to age 70, will receive higher monthly benefits.
Spouses and ex-spouses may also be eligible for benefits based on their partner or former partner’s earnings record.
People who can’t work due to a disability may be eligible for benefits if they meet certain requirements.
Of course, your situation is unique, so not everything discussed here will apply to you. With that being said, it is wise for many to wait until age 70 before taking their social security benefit. This is because each year you delay taking social security, the bigger the benefit becomes when you do eventually decide to take it. A simple example of this would be the following:
Taxes kick in at the federal level after your Adjusted Gross Income (AGI) goes over: $25,000 for an individual filing, and $32,000 for couples filing a joint return). Some of your benefit can be taxed, but much of it will not. See below:
When considering how your benefit is taxed, the number you should be aware of when looking at this issue is your adjusted gross income (line 37 on your 1040 tax form). That number will include other income (including half of your social security check), like passive income (dividends, interest and capital gains), IRA withdrawals, net business income, etc.
Most states will not tax your Social Security benefits, but some do so be sure to look into this issue based on where you will be living when taking these benefits. Be mindful that your benefit will grow by 76% from age 62 to 70. That is a great deal of money.
