Misconceptions abound when it comes to retirement programs for senior citizens. Before you look into the subject, you may believe that a comfortable retirement is waiting for you. Medicare will cover all health needs and income from Social Security will be adequate to live on.
In reality, Social Security payouts are not very robust. The exact amount that you receive will be calculated based on the 35 years during which you earned the most amount of money.
Only a certain amount can be taxed for Social Security purposes. In 2016, the maximum amount that can be taxed is $118,500. If you paid taxes on the maximum earnings throughout your entire working career, you would qualify for the maximum benefit. This year, the maximum Social Security benefit is a rather modest $2663.
The average Social Security benefit for a single recipient in 2016 is just $1341. For a couple, the average combined benefit is $2212.
Each year, the Social Security Administration has the ability to raise the benefits to account for inflation. This is called the cost of living adjustment or COLA. This year, there was no adjustment to increase the benefits that Social Security recipients are receiving because there was little fluctuation in the consumer price index.
Health Care Expenses
As you can see from these figures, unless you are capable of living a very spartan existence, your Social Security benefit alone is probably not going to be enough to allow you to retire. Plus, you have to consider the limitations of Medicare.
The Medicare program will provide a source of basic health insurance, but there are also out-of-pocket expenses that . There is a deductible for inpatient hospital stays, and there can be co-payments for long stays.
Medicare Part B is the portion of the program that pays for visits to doctors and outpatient care. You have to pay a monthly premium for this coverage; the premium is deducted from your Social Security payout. Most people are currently paying approximately $106 per month, but the exact amount of the premium is based on your income level.
There are also premiums, co-payments, and deductibles that go along with the prescription drug portion of the program.
In addition to these out-of-pocket expenses, there is a very big gap in the coverage. Medicare does not pay for long-term care, and most seniors will need living assistance eventually.
Contact Our Firm
If you would like to develop a plan that leads to a safe and secure future, contact our firm to set up a no obligation consultation: Charlotte NC Elder Law Attorneys.
John’s practice focuses on the use of Wills and Living Trusts in Estate Planning to help individuals protect their families and preserve their legacies after their deaths, but his practice also focuses on the critical issues of protecting individuals with dementia or other diminished capacity, assisting individuals in qualifying for Medicaid and other government benefits to offset the costs of long-term care, and providing special needs planning.
John is admitted to practice law in North Carolina, South Carolina, Kentucky, and Ohio, and he is accredited by the Department of Veterans Affairs.
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