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Social Security COLA Jumps 3.2% for 2024... but Medicare Part B Jumps 5.9%!

Planning Matters Radio / Peter Richon
The Truth Network Radio
December 9, 2023 10:00 am

Social Security COLA Jumps 3.2% for 2024... but Medicare Part B Jumps 5.9%!

Planning Matters Radio / Peter Richon

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December 9, 2023 10:00 am

The 3.2% cost of living adjustment reflects another year of high inflation. However, we now know we'll be paying almost 6% more for Medicare Part B! That doesn't mean you'll see a smaller SS check in January, but if you're wondering how this will affect you, Peter with Richon Planning and Erin Kennedy walk through these questions:

-Does the COLA affect when we should claim our Social Security benefits? 

-How does this jump in the cost of Medicare Part B affect my Social Security check?

-Does this COLA increase affect the program's insolvency?

If you have any questions about when you should claim Social Security or how to pay for Medicare, please reach out to Peter for a complimentary consultation by calling (919) 300-5886 or visit www.RichonPlanning.com

#COLA #SocialSecurity #IRMAA #WealthManagement #Taxes #TaxPlanning

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Peter Richon

Peter, good to see you. Big news for Social Security today. The COLA jumps 3.2% for 2024, but Medicare Part B is up 5.9%.

So the cost of living adjustment reflects another year of high inflation, but we now know we're going to be paying almost 6% more from Medicare Part B. So does this mean that we will see a smaller check in January? No, you'll still see likely a larger check because we're talking percentages of two very different numbers. The Social Security amount is typically a much larger number than the cost of Medicare is going to be, your premium amount. So even though it's a smaller percentage, that smaller percentage should mean that you do see more net net in your check. It's just that Medicare also takes a larger bite out of the total amount.

So yeah, it's funny when you're working with two different numbers and percentages, but even a smaller percentage of a larger number may mean that it's an increase. So I think a lot of people are wondering though if this COLA affects when they should be claiming their benefits. Well, yeah, I think there's a lot of things that affect when we should be claiming benefits.

Your age, your situation, whether you're single, whether you're married, if you're continuing to work, do you have other streams of income? Are you pulling from personal assets? Bottom line, the longer you wait all the way up until 70, the more your Social Security benefit is going to be. And that's money that either comes from Social Security, comes from your personal assets, or just isn't there at all for you in retirement. And so if we can make the most out of Social Security, we will be better off and we will also serve to better protect our personal assets, which by the way, you can reach into and pull out of in case of emergency, or if you pass away early, get passed on to beneficiaries. Social Security does not do those things. So we do want to use Social Security as a tool to protect our personal assets. And that's what all of the online tools and calculators always leave out of the equation, Erin, is that they look at Social Security as it's alone in a vacuum on an island all by itself. They don't incorporate all of the rest of your financial situation. And are you pulling from other assets or accounts?

Do you have other income? And by the way, the folks down at the Social Security Administration Office, if you go to see them in person, also do not take on the time or liability of pulling in all of that information to make recommendations either. Their job is to file your benefit claim on the day that you show up, not tell you if that's the best day to show up. Right.

Good point. So 2024 Medicare Part B will be 174.70. Here's a look at that. That's up 5.9%. That premium usually comes straight out of your Social Security check. Explain how this works, please.

Yeah. Well, ironically, that number is basically back to where we were two years ago because two years ago they had increased it and they had included in the cost of an Alzheimer's medication and they overestimated those costs. They thought more people would use it. It was going to be more expensive than it actually was. So last year they brought the Medicare premiums down and now we're back up to about where we were. But your cost for those Medicare premiums, Part B and Part D are means tested. They are income related, meaning the more income that you have, the higher the premium that you pay. And about $194,000 of income, a married couple filing jointly is going to start hitting IRMA.

Income related means assessment adjustment. That IRMA is basically their way of means testing how much you pay for your healthcare premiums, your Medicare cost on B and D. And so we really need to look at how to control income if we want to control IRMA. So 75% of people 50 plus worry that Social Security will run out in their lifetime. Does this COLA increase affect the program's insolvency? Well, I'm, I'm, I'm 50 minus and I'm 100% worried about it. Yeah.

I mean, yes it does. If they keep increasing the amount that they are supplying for benefits, then the possibility that we hit that insolvency point or the place where the trust fund runs out of enough funds to fund a hundred percent of promised benefits, which has gotten closer and closer, not just because we've advanced, but they've actually brought the date that they anticipate that is going to happen back, uh, as of the 2023 board of trustees release on this, they say that by 2033, they will only be able to pay 75% of promised benefits or 75 cents on the dollar. And yeah, if we keep increasing Social Security, that that is going to be more and more likely and, and, you know, dollars today are more valuable than dollars in the future.

But, but I am worried about that. And that's why when we plan out for income for, for retirement confidence, when we put those income plans together, not only do we try to optimize Social Security, but we also look at formulating multiple streams of income so that you're not all reliant on one source or dependent completely on Social Security because we're talking about the COLA, the cost of living adjustment today, right? Well, Social Security generally constitutes somewhere around 40% of most Americans retirement income. Let's just round up to 50% for nice round numbers. If inflation is 5% and your Social Security constitutes 50% of your true cost of living, well, you only got that inflation adjustment on half of your income. So inflation and costs went up 5%, but your income only went up 2.5, even if Social Security accounts for a hundred percent of the true inflation, which it never does. So again, we need to incorporate Social Security and plan it out carefully with the rest of your retirement strategies and income streams, compliment that so that you have a cohesive coordinated plan for retirement confidence. Talking this through Peter underscores how this really needs to be a conversation.

It is not an algorithm that you can plug in on your computer. Really great points here. If somebody has questions about claiming or anything that we've discussed today, what's the best way to reach you?

Yeah. And, and just real quick comment on that, nor is it a universal truth that you take it at 62 or full retirement age or 70 don't rely on your neighbor's strategy or your best friends on the golf course or, or, or in those morning breakfast meetings, look at your individual situation because it is very specific to your individual situation. And if you'd like to look that over, it is part of our optimized retirement planning strategy, and we will help you to optimize your Social Security with a specific report on that. And if you'd like to see that it can make the difference by the way, in several hundreds of thousands of dollars over retirement. So definitely worth the time that you would invest in that. So give us a call 919-300-5886, 919-300-5886, or you can email me Peter at rishanplanning.com. It looks like richonplanning.com because you don't get rich or stay rich on accident, rich on planning, but it is my last name.

Rishan planning can also visit online www.rishanplanning.com. All right, Peter, thank you. Absolutely. Always a pleasure.

Hey everyone, Peter Rishon here. Hope you enjoy the content. As always, make sure that you like, subscribe, share the videos with others that may find this information helpful. And as always, you're welcome to be in touch or to submit questions or comments.

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This has been Planning Matters Radio. The content of this radio show is provided for informational purposes only and is not a solicitation or recommendation of any investment strategy. You are encouraged to seek investment, tax or legal advice from an independent professional advisor. Any investments and or investment strategies mentioned involve risk, including the possible loss of principal advisory services offered through Brooke's own capital management, a registered investment advisor, fiduciary duty extends solely to investment advisory advice and does not extend to other activities such as insurance or broker dealer services. Advisory clients are charged a quarterly fee for assets under management while insurance products pay a commission which may result in a conflict of interest regarding compensation.
Whisper: medium.en / 2023-12-09 12:29:54 / 2023-12-09 12:33:49 / 4

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