Inflation, Infrastructure, and Medicare Increases in 2022

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Inflation! We are seeing it everywhere. From the gas we buy to our Thanksgiving turkeys, prices seem to be going up everywhere. How does this affect Medicare? Well, you’ll probably be paying more on premiums. Will the infrastructure bill make inflation worse? That remains to be seen but you should stay vigilant. We will discuss these issues and how they impact you on today’s show.

Inflation is starting to feel like 1978 again and seems to be affecting everything these days. Gas is $7 in certain parts of California! (Fortunately, we are at about half that price in NJ) 

Real estate prices are through the roof and Medicare surcharges are changing. On today’s show, we are going to be discussing Three inflation impacts we should stay aware of: Infrastructure, Medicare, and Real Estate. 

In October, the inflation rate was 6.2%, the highest it has been in 30 years. As a result, Social Security checks will be going up 5.9% from (For Example) $2,000 a month to $2,120 a month. The highest jump in 40 years! However, retirees will also be paying more for Medicare. Your Medicare premium letter should be arriving in the mail shortly and you should expect to be paying more next year.

Be aware of a surcharge potential! If applicable, your surcharge level will go by your 2020 filed tax returns. For those that have a modified adjusted gross income below $91,000 if you are single and $182,000 if you are married you pay around $170 a month. Those of you that have more than that will pay at least $238 a month. Unfortunately, it’s not a sliding scale either. Even if you only make $1 above these limits, you get a higher premium.

What if you were laid off during the pandemic? What if you retired after filing your 2020 tax returns? Well, there are some ways to mitigate these premiums. If you had a “life-changing event” you could qualify for an appeal that reduces your premium. We are starting to offer these services to our clients, so make sure to reach out to see how we can help you!

You’ve probably heard the word “Trillion” more times in the past year than ever before. The “Trillion” dollar infrastructure bill did pass. So, what are the repercussions we can face when it comes to inflation? Of course, It’s hard to know what the future holds. Let’s look at the details

This law will cover funding for important things like roads, bridges, airports, and shipping ports. Currently, inflation is rising from a variety of factors, the supply and worker shortage being some of those factors. It’s possible that this law will help with these issues but it’s also good to stay vigilant and expect higher inflation rates to stick around for a while.

What about real estate?

We’ve seen rising prices when it comes to real estate and in many ways, home prices are affected but supply shortages too. Is real estate a good investment? Not all real estate is created equally when it comes to value. While houses are skyrocketing in price, office space is not. (Notice all of those empty parking spaces at the office buildings?) it can be easy to fall into recency bias and assume the housing market will keep going up. “I can buy a house now and sell it for more later!” The market doesn’t work like that. Housing bursts come dramatically, but overall; you’ll likely see a growth of value in your home. It’s important to remember that a house is a big asset, but there is more value in the memories you make in your home than in using it as a financial investment.

All the best for a Blessed Thanksgiving Holiday!

More Resources: 

Medicare Rates –

https://www.cms.gov/newsroom/fact-sheets/2022-medicare-parts-b-premiums-and-deductibles2022-medicare-part-d-income-related-monthly-adjustment

Infrastructure Law –

https://www.wsj.com/articles/infrastructure-bill-2021-what-11627515002

Real Estate Prices

https://dqydj.com/historical-home-prices/

Listen to the full episode to learn more or skip around to certain topics.

[0:53] Thanksgiving is coming up!

[2:09] Inflation is heating up

[4:30] Medicare premium letters

[7:11] 2020 tax year for 2022 Medicare surcharge

[8:34] Infrastructure bill passed

[11:16] Will the bill affect inflation?

[13:02] Investors navigating inflation

[15:17] Residential real estate investments

[17:23] Home prices in the past

[20:55] How does inflation affect retirement planning?

[24:11] Mailbag: Will I run out of money without a budget?

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ABOUT YOUR HOST...

Donald W. Cash – CPA, CFP®, is an independent advisor. After graduating from Rutgers University, he began his career in 1985 as an accountant. In 1990, he entered the field of Estate Planning, concentrating on long-term care planning. Don has been advising clients in the baby boomer and retirement market for 20 years. He has helped over 1,000 families with their planning needs.

Don advocates for a holistic approach to Estate and Financial Planning and has relationships with other professionals including Attorneys, CPA’s, Mortgage Specialists, Insurance Specialists and Asset Managers.

He is married to Cathy and they have 4 children, Carly, DJ, Nick and Tori. They live in Freehold, NJ.

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