You’re growing older and soon, you’ll have to retire. But before you do, you have to ensure you’re going to be able to sustain your lifestyle and health. There are 54 million Americans receiving Social Security benefits – 38 million of which are retirees and the remainder disabled Americans and their dependents.
For a lot of people, Social Security and Medicare are a no-brainer, until they end up denied for benefits. Don’t let this be you – make sure you don’t fall into the trap of lies that are circulating the web, such as the retirement age being 65.
Let’s review the common myths about Medicare and Social Security.
1. The Retirement Age is 65
A lot of people still believe that 65 is the age of retirement and by waiting until then, you’ll receive the highest payouts in benefits. But this couldn’t be further from the truth.
For those born between 1938 and 1959, the retirement age increases gradually to 67 years old. If you’re wondering at what age you’re able to retire, then you can use the calculator on the SSA website.
2. Once You’re On Security Security, You Can’t Work
This is definitely not true. In fact, you’ll find some elderly people working at companies while collecting a Social Security check. There’s even the myth going around that if you do work, you’ll receive a penalty. This too is untrue.
What is true is that if you’re not full retirement age and you’re earning over $17,040 (as of 2018), then your retirement benefit reduces by a dollar for every $2 you earn over that limit. But once you reach your full retirement age, you won’t have to worry about this deduction no matter how much you earn.
3. All Medical Expenses Are Covered By Medicare
That would be nice, but unfortunately it’s a myth. Just like with any insurance provider, there are limitations to what expenses Medicare will cover.
For instance, Medicare doesn’t cover dentures, cosmetic surgery, long-term care, routine dental care, or hearing aides.
Make sure you have supplemental insurance if you want procedures and maintenance performed that isn’t covered by Medicare.
4. You Don’t Have to Pay for Medicare
They say the best things in life are free, but Medicare just isn’t one of them. There are monthly premiums, co-insurance, copay, and deductibles you have to pay for.
For example, Part A Medicare doesn’t charge a premium, but comes with a $1,156 annual deductible. Then Part B has a $99 monthly premium, a $140 annual deductible, and 20% copay.
Make sure to read the costs of all four plans to see which you qualify for and are comfortable with paying before the Medicare supplement open enrollment date comes around.
5. Social Security is About to Be Bankrupt
There are concerns regarding the sustainability of the current stat of Social Security. And if left unaddressed, there’s the possibility that the benefits will be reduced by up to 23% by 2034.
As far as the program completely running out of money, that’s not the case. As long as Americans are working and paying their payroll taxes, there will always be money in the Social Security reserve.
6. Social Security Benefits Increase to Match Cost-of-Living Increases
Ever since 1975, Social Security set forth a provision to automatically make cost-of-living adjustments each year. This may put your mind at ease knowing your benefits will increase over time as inflation happens.
However, the reality is that in recent years, the program has failed to to match inflation rates. This causes seniors to see little or no extra money coming into their bank accounts to accommodate life cost increases.
7. I’ll Be Notified of Medicare Open Enrollment
Medicare open enrollment comes around once a year and if you miss it, you won’t be able to apply until the following year. This means you need to keep your ear to the ground to ensure you don’t miss out.
If you believe you’ll be automatically notified of open enrollment, then think again. Now, if you apply for Social Security before 65, then you’re automatically enrolled in either Part A or Part B Medicare.
But if you’re over 65, then you have to keep watch for open enrollment. If you fail to enroll in Part B or Part D, then there’s a penalty you’ll have to pay once you do enroll. And the penalty stays with you for the rest of your life and as long as you’re insured through Medicare.
8. Poor Health Disqualifies You for Medicare
This might’ve been true before the Affordable Care Act came along. But health insurance providers are no longer allowed to pick and choose which applicants they want to accept. The Act requires Medicare insurance providers to accept applicants no matter their health condition.
So if you have pre-existing health problems, you don’t have to worry about denial for this reason.
9. Medicare is a Government Program
While the government helps fund Medicare, it’s a completely private healthcare system. Medicare is simply a government-financed insurance provider.
The nursing homes, hospitals, clinics, and doctors in the program all practice privately. The only difference is the government writes the check to pay for the medical expenses covered under your plan.
Don’t Let Myths About Medicare & Social Security Deter You
Now that we’ve debunked these myths about Medicare and Social Security, it’s time to take control of your finances and health care.
As you grow older, you’re going to be less capable of earning wages or affording traditional health insurance. The best time to start educating yourself is now.
If you’d like to learn more about finance and health care, then we invite you to visit Frank SMS. We share quotes about many different topics that can inspire you.