But even though the end may be nowhere in sight, it still does not mean that you will receive your Social Security benefit anyway or at least the amount of Social Security you have been told you would get.
Because of these health costs and these rules, the amount of Social Security benefits that a majority of retirees have and will continue to rely on will, when it comes to actual take home income, either be level for the remainder of retirement, decreasing throughout retirement or even possibly vanishing altogether.
The reason, simply put, health care, the one thing no one is planning for, is inflating at three times the rate of any cost of living adjustment given by Social Security and to make matters worse, the Hold Harmless Act will only protect people from Part B increases, not Part D increases, so the protection is limited at best.
By the way, for those with high incomes as defined by Medicare, there is no Hold Harmless protection. If Medicare premiums go up by more than your Social Security COLA increase, then so be it, your Social Security benefit will decrease.
Those that placed their savings in tax-deferred accounts will see the impact when the age of 70.5 rolls around, and you have to take your required minimum distribution (RMD).
This RMD, unless in a Roth, will be considered income by Medicare and will be used to determine if you have to pay even more for your healthcare. The more of it you have, the less Social Security you will receive, thus saving Social Security for everyone else.
The time to create another form of guaranteed income, one that is not recognized as income by the IRS and/or Medicare is now, because what you don’t know about retirement will hurt you!
Dan McGrath is the co-founder of Jester Financial Technologies and is considered to be one of the country’s leading experts on the subject of health related costs and how they will affect retirement and the overall financial planning process. McGrath also authored the best-selling retirement planning book What You Don’t Know About Retirement Will Hurt You.