Common Sense Financial Podcast

Social Security and Medicare with Rich Grawer

Social Security and Medicare with Rich Grawer – Encore

What should you know, consider, and do when it comes to your social security benefits? And what about Medicare?

Show Notes 

  • Social security and Medicare expert Rich Grawer addresses some of the most frequently asked questions Brian gets asked by his clients.
  • In order to qualify for a social security benefit, you need the so-called 40 credits. You can gain a maximum of four credits a year, and in 2017 you had to have earned and paid social security taxes on at least $5,200.
  • The full retirement age is determined by the year you were born: if you were born between 1943 and 1954, your retirement age is 66. If you were born it would be 66 and 2 months – and it keeps going up.
  • After that, they take your 35 highest years of earnings (if you don’t have them, you’ll get a zero), they index them to inflation, and divide them up by 420. That’s how they come up with an average monthly benefit. Social security then reduces that benefit further by applying a formula that’s heavily weighted toward lower- and middle-wage earners.
  • The general principle is this: if you take your benefit before your full retirement age, it’s going to get reduced. If you take your benefit after your full retirement age, it will automatically get increased by about 8% a year until you reach age 70.
  • In the case of a spouse that has never worked, that spouse qualifies for the partner’s own benefit – they can get a maximum that’s 50% of the working spouse’s benefit. This benefit gets cut if one of them claims it before having reached retirement age.
  • There are exceptions but, generally, if a partner dies, there’s a possibility for the surviving partner to either claim their own benefit if it’s greater than the other spouse’s benefit.
  • A primary benefit is one that you claim off your own work record. A secondary benefit is when you claim off someone else’s record.
  • The Government Pension Offset is a rule that wipes out any attempt by someone who’s getting a government pension to file for a spouse or widow benefit off their husband or wife.
  • There are three ways to file for benefits: over the phone, in person through an appointment, or online. Because of the bureaucracy of the situation, Rich always advises clients to file two months in advance.
  • To determine whether your social security benefits are going to be taxable, it depends on the so-called Provisional Income. It’s your adjusted gross income plus 50% of your social security benefits. If you’re single, that’s higher than $25,000. If you’re a couple, then that number is greater than $32,000. The social security tax is proportionally dependent on how much over those thresholds you are.
  • As Rich explains, in the worst-case scenario, only 85% of your social security benefit will be taxed.
  • The easiest way to qualify for Medicare is to reach age 65. The month you turn 65, the first of that particular month, is when you become immediately eligible for Medicare.
  • You can also automatically qualify for Medicare if you have never worked and earned any social security quarters or credits but your spouse has or if you have been on social security disability for 24 months.
  • If you are working past 65, then you become eligible the moment you quit your job and stop being on your work health plan.
  • When it was set up in 1965, Medicare had two parts: one focused on hospital, home health, hospice, while the other part covered pretty much everything that was left – doctor’s visits, x-rays, blood tests, etc.
  • There are a few mistakes you should avoid making when it comes to Medicare: not signing when you’re supposed to, putting your Medicare plans on autopilot, and not tapping into the network.