The number of Americans turning 65 daily is mind-blowing! Over 10,000 Baby Boomers a day are becoming eligible for Medicare AND Social Security between now and the year 2030. And if they are not careful, they can leave hundreds of thousands of dollars on the table.

Things to consider: Do I take Social Security at 62 at first chance, 65 with Medicare, 67 at full retirement age or 70, and earn an additional 24% on my money? Do I apply for a Spousal Benefit or my own retirement benefit? Which one will give me more money? What are the financial ramifications of those decisions?

On the other hand, do I stay with Original Medicare and get a Medicare Supplement (MediGap) and prescription drug plan, or do I take a Medicare Advantage plan? Do I choose an HMO or a PPO?

Do I ignore Medicare because I am a veteran getting healthcare at the VA or do I take both, and why? Do I switch from Original Medicare to Medicare Advantage with my TriCARE For Life, and why? Many questions whose answers have serious implications financially and healthcare wise.

When you consider that Social Security and Medicare are your two largest entitlements, the wrong decisions can cause a DOUBLE WHAMMY that will either pay you dividends or leave you in a dust bowl of regrets. So, let’s unpack these two and see what you need to think about.

Social Security: At 62 or later?

Since the first decision you must make is social security, because you turn 62 sooner than 65, let’s start here. There will be many temptations to take it early and be done with it. After all, a little breathing room is always welcomed, but at what cost?

Somethings to think about first…

First, keep in mind that the Social Security Administration is the WORST place to go for advice. You might be thinking, “HOW CAN YOU SAY THAT? AREN’T THEY THE EXPERTS?” When you consider many people have called Social Security two or three times and have received two or three different answers to the same question…this is called a clue.

I called Medicare (CMS) before becoming an agent, for my mom. I figured they must be the experts on Medicare, right? Boy, was I wrong! Therefore, do not assume that because they are the government, they know what they are doing. There is a reason why we say in the military, “Good enough for government work.” But I digress.

Second, did you know the Social Security Administration is prohibited from giving advice? They can only share what is on their screen, nothing else. When you consider there are 2,728 core regulations (according to Get What’s Yours, page 15, para. 2) and the numerous codices that are attached to them, it’s impossible to know EVERYTHING, even for a Registered Social Security Analyst expert like me. The goal is to know all the important stuff and how to research the rest.

To Take or NOT To Take, that is the Question…

There are two reasons only to take the money and run at 62:

• You are not doing well financially and need help.
• You have health issues that indicate you may not live past 70.

But other than these two reasons, there really is no other reason to give up 30% (and up to 54% if you wait until you are 70) of your money.

For easy math, if your check were projected to be $1,000 at the full retirement age of 67, taking your check at 62 would pay you only $700 per month (a 30% loss equaling $3,600 for the year). That is a HUGE loss when you consider the many years you have left to live.

If you wait until 70, you receive an additional 8% per year (8% x 3 years = 24%). Your check would be $1,240 per month (that is an additional $6,480 per year). And when you consider that each year you get a COLA (cost of living allowance) increase, your check would be larger than $1,240. If you were to live to 90-years old (again, not counting COLA, since we don’t know what that would be, as it is based on inflation), you would earn an additional $129,600. If your check is larger than $1,000, your additional earnings would also be higher.

The Break-Even Analysis!

Now, Social Security, and other would-be experts, point to the break-even analysis. In simple terms, they take whatever you would have received during the five years (eight if you are waiting until 70) and show how long it would take to receive the amount you did not take during those years.

For example, using the previous scenario, $700 a month for five years, equals $42,000. It would take 11 years and six months of getting the difference of $300 per month (your check is now $1,000) to equal $42,000. So, in this scenario, you would be 78 ½-years old when you break even.

Many think, “I may not be ALIVE at 78!” Well, according to an SSA Actuarial study (found on page 28 of Get What’s Yours), at age 70 you only have a 2.45% chance of dying in the next year, and a 6.16% at 80-years old. In other words, most people live A LOT longer than they believe they will. What you DON’T want is to run out of money when you need it most, in your 80s and 90s, when your needs will be greatest.

Other Considerations

The amount you receive does not just affect you; it also affects:

• Spousal Benefits
• Survivor Benefits

However, there are other considerations that your PIA affect (Primary Insurance Amount, how much you receive from Social Security), which include:

• Various other benefits you may qualify for.
• If you are a veteran receiving service-connected disability after 2023, how much you will receive once your PIA is reduced by 30% due to disability compensation.
• How much you will receive after the WEP (Windfall Elimination Provision) or GPO (Government Pension Offset), should you have a pension that did not contribute to Social Security.
• How much of your Social Security will be taxed: none of it, 50% or 85% of your benefits?
• And more!

Since it is not how much you get that matters, but how much you keep; you want to ensure you maximize your earnings while minimizing your exposure to taxes and medical expenses.

Medicare: Your BIGGEST Benefit of All!

Since we require more medical attention the older we get, if you are not careful, those expenses can wipe out what you have earned. So, choosing how to receive your Medicare benefits is a key component to not only your financial situation, but your quality of life.

Which is why you need someone you can trust to help you navigate these waters with expert analysis, providing actionable information. If you have an estate attorney and/or a financial planner, you also need a Registered Social Security Analyst (RSSA) and fiduciary insurance broker specializing in Medicare on your team, to ensure a well-balanced and well-planned strategy for your retirement.

The Good News

Here is some good news. If you made a mistake on choosing when to take your Social Security, you have two options to correct it: withdrawal and voluntary suspension. Which, if any, would be beneficial to you depends on your circumstances.

Also, there is an analysis you can get that will provide all the information you need to make the best decisions with your specific circumstances, finances, and goals. If you want more information on this analysis, make sure to leave a comment or for a faster response, contact us through the HAVE A QUESTION in the sidebar to the right (below if you are reading this on your smartphone).

In conclusion…

Retirement is a rite of passage. You have worked hard all your life so you can enjoy your golden years. However, it is easy to hurt your retirement by making hasty and emotional decisions based on hearsay or someone else’s advice. Even if that person used an RSSA and fiduciary agent and has a solid game plan, it does NOT mean it would be solid for you.

Your income, investments (if any), lifestyle, health, work history, family size and composition are different. Therefore, the analysis of your circumstances will ALSO be different. And while many love to think they know best, based on their situation, it would be a fool’s bet to assume their solution is cookie cutter and applies to you as well. Ask the questions! Use YOUR information and numbers! Do the math (the math never lies)! Then, construct a plan that will serve you for the rest of your life.

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Sources: Get What’s Yours: by Laurence J. Kotlikoff, Philip Moeller and Paul Solman – https://rb.gy/276flo