People tend to get confused when talking about Social Security and Medicare. They tend to believe they are only used to aid low income and disabled in our society. These programs are however, multi-use programs and their main intention is for the retired or aging population that have paid in to these systems throughout their working lives in advance. The funds paid in are used to support those using social benefits currently with the promise that funds would be there for them in their retirement too. These funds are the cornerstone to retirement for many people, so having accurate and accessible information available is vital.
The mid 1930s were the inception of Social Security under President Roosevelt’s term and this was done in response to the devastation seen during the great depression. The government responded to fight the destitution and poverty that was present throughout many families and individual lives with Social Security as the weapon. Social security programs have progressed and reformed to include more groups of people and varying circumstances through the years.
Medicare came in to existence in the mid-1960s and it was a way to provide medical help and care to people mainly of an aging population that could not otherwise get health insurance. Just like Social Security, Medicare has also expanded through the years and while it has grown to provide resources to disabled, ill and low-income families, it is still intended to serve the aging population as a way to have guaranteed health coverage in their later years as well.
The history around social security and Medicare have been successfully covered, the next thing is to dive in to the who and when of the social security system and programs.
According to ssa.gov, people eligible for social security benefits would be able to start collecting as early as 62. However, if you start collecting benefits before “full” retirement age (67 for those born after 1960 and varied ages if born previous to ‘60) your benefit will be reduced comparatively. This SSA publication (https://www.ssa.gov/pubs/EN-05-10035.pdf) states your benefit at 62 will be 27.5% less than if retiring at your indicated full retirement age. You will also need 40 credits (approx 10 working years) of paying into social security in order to qualify to receive benefits.
At full retirement age, you can start receiving higher benefit, if you have the opportunity to swing it, it is better to wait until you are 70 years old. There is a positive outcome to waiting until you are 70 years old. You can also add a few months to it as much as you can even after clocking 70. You will see an increase in your future monthly check for every month that you postpone collecting earnings after you are 70 years old. An additional benefit of 8% can also be added to your monthly check for every year past full retirement that you wait.
This can add up to be a huge plus for the long term by delaying the collection of benefits even slightly. For many people, especially those who are still earning, it is realistic to put off benefits for a higher long term amount. There are also benefits for widows and widowers as well as minor children in some cases, so be sure to inquire directly with questions around those circumstances. For other considerations and guidelines to be considered, follow the link at the end of the article to connect to the ssa.gov website publication directly.
The benefits of Medicare are quite different from that of social security. This is because waiting longer than the Medicare eligibility age does not benefit you and it is even not advisable as it can cause your premium to go higher. It is rather advised to sign up for Medicare at approximately 3 months before your 65th birthday by the SSA. This work automatically if you have been enrolled in social security. You will need to sign up manually if you are delaying social security benefits. You may have to pay a late enrollment penalty if you do not sign up early.
When preparing for retirement, get your facts early and research wisely. There is a lot of misinformation around social security and Medicare floating around. Seek counsel directly from the administration for any ambiguous questions and feel more confident in your ability to retire.