The federal government recently announced an increase to Social Security benefits for 2021 but it also came with an increase in Medicare premiums. On this episode, we’ll tell you what you need to know about these adjustments along with thoughts on additional changes that could come be coming down the road.
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A lot’s happened since the last time we recorded the podcast and we can’t imagine that slowing down anytime soon with the election approaching.
While we’ll spend a little time on what’s been in the headlines recently, the focus of this episode of the Your Money & Your Life podcast is on Social Security. With approximately 70 million Americans claiming benefits, anytime there’s news regarding SSI, it’s important to provide an update.
The federal government recently announced that a 1.3 percent cost-of-living adjustment (COLA) will begin with benefits payable beginning in January of 2021. That bump is about on average for the past decade but last year’s 2.8 percent increase was more in line with the past 40 years.
That small percentage might not strike you as a significant change but Social Security benefits can be much larger than many people expect. A client we were working with recently to get the most out of their Social Security is set to receive more than $65,000 annually from the benefit so that should give you some idea of how significant this income is for many people.
Of course the biggest concern we always hear is about the future of the program. Will it run out of money? That’s what many Americans are concerned about it often causes people to take their benefit earlier than they need to, which can cost them a lot of money over the life of your retirement.
We expect changes to happen to sustain the program, which could likely include reducing that COLA. One of the things that the Trustees suggest to help make the program solvent is –
• Raise the retirement age to 70. Currently at 66 to 67.
• Increase payroll tax 6.2% on first $137,700 of income. (going to $142,800 in 2021)
• Eliminate the $137,700 Cap.
We’ll talk about all of this during the show as well as what this means for those that have already retired.
Listen to the entire episode or click on the timestamps below for a specific segment.
3:22 – Mixed signals from the market with the latest news.
4:37 – Canceled debates
6:55 – Cost of living & premium increase in Social Security benefits
9:08 – Is Social Security going broke?
11:04 – Stats on claiming benefits
12:11 – Ways they could make the program solvent
14:28 – Reducing the inflation benefit
16:47 – How does this impact someone in retirement now?
20:38 – Getting to Know Don: What’s a habit that drives you crazy that some people might have?
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Donald W. Cash – CPA, CFP® is an independent advisor. Don began his career in 1985 as an accountant after graduating Rutgers University. In 1990 he entered the field of Estate Planning with a concentration in 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. He advocates a holistic approach to Estate and Financial Planning as has relationships with other professionals including Attorneys, CPA’s, Mortgage Specialists, Insurance Specialists and Asset Managers. Don is married to Cathy and have 4 children, Carly, DJ, Nick and Tori. They live in Freehold, NJ.