by Kristin P. Sinclair January 10, 2020
For those already receiving Social Security Benefits and also a Beneficiary of Medicare, You may have received; Your notification letter by now most likely that You are getting a cost of living increase.
You were also notified in the letter, that Your Medicare Premiums are going up, and Your cost of living increase will help to cover the additional cost associated with Medicare Premiums. So let’s look at some numbers:
$ 750.00 times 1.6% equals $12.00 add those two figures and you get $ 762.00
$ 1,000.00 times 1.6% equals $16.00 add those two figures and you get $ 1,016.00
$ 1,250.00 times 1.6% equals $20.00 add those two figures and you get $ 1,270.00
So when you are talking with folks and your friend shares information with you, and you hear of someone’s social security income increase amount and the numbers seem different for different people, yes it could happen.
In 2019 most people had a Medicare part B premium of $135.50, most people in 2020 will have a Medicare part B premium of $144.60 what is the increase to most peoples, Medicare part B premiums increase of $9.10. So for the person with an average social security check of $ 1461.00 before any deductions, with a cost of living increase of $23.38. Many Beneficiaries of Social Security and Medicare will feel like they got a bit of a raise.
For others they might get assistance from the federal Government to help them live a bit more comfortably. And receive a Low Income Subsidy making it possible the person living on a very low amount of social security income to more easily pay for medications.
And yet others could actually pay more than the $144.60 monthly for their Medicare Part B, why would that be, they had an income amount two years ago that they have what is called income related monthly adjustment amount.
So things can seem puzzling at times when folks share information with each other. But one thing that does not need to be puzzling. When you work for more than 40 quarters and pay into the social security system and the Medicare system at minimum required levels you get to have a level of confidence that you also worked to pay into the Medicare Part A in advance while you worked. And when you begin to receive Medicare Part B you will pay a premium for that portion of Medicare when you receive the benefits.
When you have paid into the Social Security System for 35 or more years you will have a greater amount of Social Security benefit than if you paid into the system less than 35 years. If you paid into the system for 10 or more years, let’s say for 10 or more years or 40 quarters at a minimum. Some people’s benefits could be very different than another person’s benefit amount.
For the person who paid social security taxes on income which topped at $100,000.00 annually for many of their working years, and the person who paid social security tax on income which topped at $50,000.00 for many of their working years, and the person who paid social security tax on income which topped at $25,000.00 for many of their working years, each of those people will have contributed into the system at different levels and their benefits will vary based upon their earnings history. And then add to your consideration the person who worked paying into the social security system for the 35 years or more, and the person who worked 20 years and the person who worked 15 years. Each of those people also contributed into the system at different levels as well. So paying into the Social Security trust fund while challenging at a young age, it has a reward which can be benefited from later in life when working a full time schedule is much less realistic for many people when they need and want to have a chance to slow done a bit more and enjoy more leisure time and the opportunity to volunteer your precious time to causes important to so many.
Not every person pays the same exact amount of Medicare Part Premiums as every other person receiving Medicare benefits, but most people do indeed pay the same amount. Some folks who have a much lower income are receiving a premium increase as well. And if their Social Security income is at a low enough level they might actually pay less than most Medicare Beneficiaries.
Well the same holds true for those who have a significantly larger income over all, They will pay an additional adjusted premium based upon Their income from two years prior.
So things can seem complicated, Life is complicated, We all need to do our best to plan for our tomorrows and take care of our todays as well. When We are able to plan for tomorrow it can make tomorrow a bit easier to enjoy.
So let’s consider a more comfortable future. If one worked for 35 years and most of Americans in their early working years made very little earned income, but contributed to Social Security every year and as the years past your earnings grew and job changes were made and your earnings grew more. And now it is time to be playing more, work less. You enjoy working through part of the year but no desire to work as much as you once did.
Social Security income for some maybe $1400.00 for another, will be $1900.00 per month and for someone else they are looking at $2700.00 per month. Since you still enjoy working, it would be wise to have some taxes withheld from your Social Security earnings. Since you enjoy working portions of the year you want to have adequate taxes with held from your earnings. With that additional planning you likely have made certain that you will have few tax obligation surprises when it comes time to file your tax return.
Life is a series of choices and planning for retirement years can involve choices as well.
Updated in Rock Hill SC and Charlotte NC
by Kristin P Sinclair A Accu Tax (803)329-0615
January 10, 2020