Will Medicare take away my Social Security?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Locked
FlyingMoose
Posts: 344
Joined: Wed Mar 04, 2009 10:48 pm

Will Medicare take away my Social Security?

Post by FlyingMoose » Thu Sep 15, 2016 2:13 pm

I'm currently 37, and have been planning to wait until 70 to claim Social Security if possible.

I saw an article that the Medicare premium (for new claimers) is going from $104.90 in 2015, to $121.80 in 2016, and $149 in 2017. That is over a 19% per year increase. Even being generous and only calling it a 15% real increase per year, it will wipe out my entire Social Security payment by the time I'm even eligible, and I'll have to put in another $1000 a month. That's even considering that there isn't another increase of FRA; as it is I'll be getting 8% less than my parents.

If this happens, I will consider moving to another country with cheaper medical care and foregoing Medicare... Perhaps the people in my generation saying that they won't get any Social Security are right.

Should I change my planning to exclude Social Security?

User avatar
dm200
Posts: 16000
Joined: Mon Feb 26, 2007 2:21 pm
Location: Washington DC area

Re: Will Medicare take away my Social Security?

Post by dm200 » Thu Sep 15, 2016 2:52 pm

FlyingMoose wrote:I'm currently 37, and have been planning to wait until 70 to claim Social Security if possible.
I saw an article that the Medicare premium (for new claimers) is going from $104.90 in 2015, to $121.80 in 2016, and $149 in 2017. That is over a 19% per year increase. Even being generous and only calling it a 15% real increase per year, it will wipe out my entire Social Security payment by the time I'm even eligible, and I'll have to put in another $1000 a month. That's even considering that there isn't another increase of FRA; as it is I'll be getting 8% less than my parents.
If this happens, I will consider moving to another country with cheaper medical care and foregoing Medicare... Perhaps the people in my generation saying that they won't get any Social Security are right.
Should I change my planning to exclude Social Security?
Who knows what will happen in those 30+ years for you??

I don't know where you get the 8% less than your parents?

This is, indeed, an odd period. My Mediare premium is still 104.90, but my wife's (just turned 65) is 121.80. Assuming that inflation (as measured by the same index as used by Social security) picks back up to even a modest annual amount, everyone's medicare premiums will then be the same and there will be (perhaps not much) an increase in net Social Security.

User avatar
Pajamas
Posts: 5119
Joined: Sun Jun 03, 2012 6:32 pm

Re: Will Medicare take away my Social Security?

Post by Pajamas » Thu Sep 15, 2016 3:04 pm

dm200 wrote: Who knows what will happen in those 30+ years for you??
Agreed. I am significantly older than you are but also significantly below the age for Social Security and Medicare. My financial planning does not rely on Social Security as a source of future income even though I paid into the system. I will look at it as a bonus if I live long enough to get it.

FlyingMoose
Posts: 344
Joined: Wed Mar 04, 2009 10:48 pm

Re: Will Medicare take away my Social Security?

Post by FlyingMoose » Thu Sep 15, 2016 3:32 pm

dm200 wrote:I don't know where you get the 8% less than your parents?
Their full retirement age is 66, and mine is 67. For any given age, that means there will be one less year to delay social security. Since it increases 8% per year, I'll get 8% less.

In other words, they will get 4 years of increases from 66-70, and I will only get 3 from 67-70. Pretty sneaky what they did there. They hid an across-the-board 8% cut in SS benefits as a year increase in FRA. Note that my grandma's FRA was 65, so I'll be getting 16% less than her.

User avatar
mickeyd
Posts: 4541
Joined: Fri Feb 23, 2007 3:19 pm
Location: Deep in the Heart of South Texas

Re: Will Medicare take away my Social Security?

Post by mickeyd » Thu Sep 15, 2016 3:47 pm

Should I change my planning to exclude Social Security?
Absolutely. That's what I did in the early 70's when we got married and did a bit of long term planning (with pencil and paper). What a surprise when SSA wanted to transfer thousands of dollars to me each month after age 70 that I am alive. What a country! What a planner!
Part-Owner of Texas | | “The CMH-the Cost Matters Hypothesis -is all that is needed to explain why indexing must and will work… Yes, it is that simple.” John C. Bogle

B0bL0blawsLawBl0g
Posts: 100
Joined: Thu Dec 17, 2015 12:36 pm

Re: Will Medicare take away my Social Security?

Post by B0bL0blawsLawBl0g » Thu Sep 15, 2016 4:00 pm

My crystal ball says no. Your crystal ball seems to say yes. Neither of us actually has a crystal ball.

My question is, what current actions will you take that are dependent on how much Medicare will cost in 33 years? Either way, you will save and invest and plan, and sometime as you get closer to retirement age, you will have a clearer picture of what your SS/Medicare situation will be. I'd find it difficult to believe that you are really going to take any immediate actions based on what you think Medicare might cost in 33 years.

FlyingMoose
Posts: 344
Joined: Wed Mar 04, 2009 10:48 pm

Re: Will Medicare take away my Social Security?

Post by FlyingMoose » Thu Sep 15, 2016 4:03 pm

B0bL0blawsLawBl0g wrote:I'd find it difficult to believe that you are really going to take any immediate actions based on what you think Medicare might cost in 33 years.
I am almost 100% stock in my retirement accounts because I consider Social Security to be my bond allocation. I would change my allocation.

B0bL0blawsLawBl0g
Posts: 100
Joined: Thu Dec 17, 2015 12:36 pm

Re: Will Medicare take away my Social Security?

Post by B0bL0blawsLawBl0g » Thu Sep 15, 2016 4:12 pm

FlyingMoose wrote:
B0bL0blawsLawBl0g wrote:I'd find it difficult to believe that you are really going to take any immediate actions based on what you think Medicare might cost in 33 years.
I am almost 100% stock in my retirement accounts because I consider Social Security to be my bond allocation. I would change my allocation.
Wait, you are considering changing your asset allocation today (presumably to buy more bonds) because of your prediction that, by 2049, Medicare costs will subsume SS payments? I am not sure that I understand the logic, even if I accept the underlying premises.

BTW, I think we at lease agree on one thing: I am 95% equities as a 34 year old. But for me, it's not because of any doomsday predictions about SS/Medicare, it's just because I think that equities are the best asset class for growth and my time-horizon to use any of my investments is very long.

BanditKing
Posts: 541
Joined: Tue Oct 29, 2013 11:11 pm

Re: Will Medicare take away my Social Security?

Post by BanditKing » Thu Sep 15, 2016 4:14 pm

What's the harm in excluding it from your calculations? You just end up saving more. :mrgreen:

Worst case, you get to the finish line and you have your big retirement PLUS SS.

Rupert
Posts: 2993
Joined: Fri Aug 17, 2012 12:01 pm

Re: Will Medicare take away my Social Security?

Post by Rupert » Thu Sep 15, 2016 4:32 pm

Rising healthcare costs in general are the problem. It's not unique to Medicare and Social Security. Insurance premiums and deductibles are gobbling up everyone's salary; retirees are not immune. But, yeah, go ahead and exclude Social Security from your calculations. What's the harm in that?

Boglegrappler
Posts: 996
Joined: Wed Aug 01, 2012 9:24 am

Re: Will Medicare take away my Social Security?

Post by Boglegrappler » Thu Sep 15, 2016 4:48 pm

For those who care about what things cost and who pays for them (most Bogleheads do), I recommend the following Kaiser Foundation report:

http://kff.org/medicare/issue-brief/the ... financing/

It has information usually ignored by those who don't. You can look at the growth projections and other data and draw your own conclusions.

Particularly interesting is Figure 7, which shows that of $644 BB spent in 2015 the portion paid by enrollees was only 13% of the total, with an additional 37% paid by payroll taxes on current workers. Medicare spending is currently double what the payroll tax and enrollee charges bring in.

supersharpie
Posts: 648
Joined: Wed Dec 22, 2010 1:28 pm

Re: Will Medicare take away my Social Security?

Post by supersharpie » Thu Sep 15, 2016 4:53 pm

OP, you failed to do your research. Medicare Part B premiums were $88.50 in 2006 so they have increased a grand total of $33.30/month over the past decade.

The sky is not falling.

pshonore
Posts: 6276
Joined: Sun Jun 28, 2009 2:21 pm

Re: Will Medicare take away my Social Security?

Post by pshonore » Thu Sep 15, 2016 4:58 pm

supersharpie wrote:OP, you failed to do your research. Medicare Part B premiums were $88.50 in 2006 so they have increased a grand total of $33.30/month over the past decade.

The sky is not falling.
Actually they would have increased by substantially more last year for those not in the "hold-harmless group" if Congress had not passed a law to limit the increase and borrow the money.

And OP should know there is a law that says Part B premiums cannot increase by more that your annual SS benefit increase for those in the "hold harmless" group

User avatar
Peter Foley
Posts: 4316
Joined: Fri Nov 23, 2007 10:34 am
Location: Lake Wobegon

Re: Will Medicare take away my Social Security?

Post by Peter Foley » Thu Sep 15, 2016 5:19 pm

pshonore wrote:
And OP should know there is a law that says Part B premiums cannot increase by more that your annual SS benefit increase for those in the "hold harmless" group
This is key to understanding the increase in Part B premiums. If you are receiving SS benefits and are enrolled in part B you are effectively held harmless in terms of increases in Medicare premiums. They will not increase faster than your SS benefits.

If you are 65 and enrolled in Medicare AND choose to delay receipt of SS benefits you pay for the increase in costs in terms of higher premiums. (That is the not-hold-harmless group.) Recent increases to the not hold harmless group have been impacted by the lack of cost of living increases in SS benefits. 2010, 2011 and 2016 had no cost of living increase in SS benefits.

See https://www.ssa.gov/news/cola/

User avatar
warowits
Posts: 352
Joined: Tue Sep 29, 2015 2:38 am

Re: Will Medicare take away my Social Security?

Post by warowits » Thu Sep 15, 2016 5:29 pm

BanditKing wrote:What's the harm in excluding it from your calculations? You just end up saving more. :mrgreen:
There is something to be said for enjoying some of your money before you're retired.


The harm is if people do the math that way, they may wrongly conclude they cannot save enough, so will never retire, in which case why save at all. You should save as much as you can, but it seems like a complete collapse in SS is unlikely, and you shouldn't base your retirement on it. I personally assume that SS will deliver about 85% of its current pay out by the time I get there, and try to save accordingly.
There are an army of people whose pay checks depend on convincing people to invest in ways that are against their self interest. This forum is the volunteer army that fights back!

Boglegrappler
Posts: 996
Joined: Wed Aug 01, 2012 9:24 am

Re: Will Medicare take away my Social Security?

Post by Boglegrappler » Thu Sep 15, 2016 5:35 pm

This is key to understanding the increase in Part B premiums. If you are receiving SS benefits and are enrolled in part B you are effectively held harmless in terms of increases in Medicare premiums. They will not increase faster than your SS benefits.
People in the "upper income" category, as determined by the people who write these regulations, are not in the held harmless group.

Last year required a special piece of legislation to prevent the entire cost increase from being laid on that minority of people.

randomguy
Posts: 5552
Joined: Wed Sep 17, 2014 9:00 am

Re: Will Medicare take away my Social Security?

Post by randomguy » Thu Sep 15, 2016 6:18 pm

Rupert wrote:Rising healthcare costs in general are the problem. It's not unique to Medicare and Social Security. Insurance premiums and deductibles are gobbling up everyone's salary; retirees are not immune. But, yeah, go ahead and exclude Social Security from your calculations. What's the harm in that?
The harm is you would rather spend money now than having a fancy funeral:)

At some point things will level out. Do the math on what total medicare spending would be as a percentage of the US economy if your SS check was equal to your medicare premium and decide if that is remotely feasible. Trying to figure out the next 30+ year of health care costs and how they will be paid is well beyond my ability to predict.

The Wizard
Posts: 11640
Joined: Tue Mar 23, 2010 1:45 pm
Location: Reading, MA

Re: Will Medicare take away my Social Security?

Post by The Wizard » Thu Sep 15, 2016 7:55 pm

For those if us in higher Medicare IRMAA tiers, I would say yes, it's entirely possible that Medicare premiums could eventually exceed our SS payout.
It's a double whammy sure thing actually: the cost of medical care going up in excess of inflation each year coupled with increases to subsidize those in the base hold-harmless tier.
I just started Medicare in 2015, so it will be a few more years before I have sufficient data to extrapolate a projection on this...
Attempted new signature...

User avatar
LadyGeek
Site Admin
Posts: 45054
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: Will Medicare take away my Social Security?

Post by LadyGeek » Fri Sep 16, 2016 2:52 pm

This thread has run its course and is locked (topic exhausted, no conclusion can result from this discussion). Also, conjecture on the future of Social Security and Medicare is off-topic. See: Politics and Religion
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

Locked