Written as a primer for financial planners and accountants, Theodore J. Sarenski’s Social Security and Medicare: Maximizing Retirement Benefits is an essential tool in helping FAs improve their clients’ retirement plans.

His book is another reminder that Social Security—“the largest income maintenance program in the United States,’’ he writes—and Medicare are experiencing what he calls “expected and worrisome shortfalls.’’

Sarenski, a CPA/PFS and certified financial planner, founded Blue Ocean Strategic Capital LLC in 1997 in Syracuse, N.Y. He saves the worrisome shortfall news for the last chapter in a book that covers everything from the basics of how the Social Security system operates, including retirement, survivor and disability income benefits, to the components of Medicare and the future of Social Security and Medicare.

Sarenski writes that Social Security, established in August 1935, in 2016 paid more than $1 trillion to more than 62 million recipients. In the nearly 85 years since its inception, Social Security has had 12 major legislative changes—including the rescinding, with exceptions, in 2015 of “two favorite methods of collection of Social Security benefits: the file and suspend and the restricted application for spousal benefits only at full retirement age.’’

Sarenski explains who is exempt from the change (those who were 66 by April 30, 2016), what the current requirements are for a spouse or qualifying child to collect, and how workers can suspend collection until 70 and receive credits for uncollected benefits. 

He says that 73% of retirees, out of necessity, begin collecting their Social Security benefits earlier than full retirement age, and that Social Security alone provides the majority of income for about 66 percent of Americans who receive benefits.  

Early collection of benefits takes its toll: Taking collection of benefits at 62 for those born between 1943 and 1954 reduces benefits by 25 percent; for those born 1960 and later, benefits collected beginning at 62 are reduced by 30 percent.

When possible, he says, retirees should wait to collect benefits until full retirement age: 66 for those born between 1943 and 1954, and 67 for those born in 1960 and later.

Sarenski’s straightforward, jargon-free writing enables the reader to grasp the government’s accounting methods. For instance, a worker’s status for Social Security benefits is calculated using the quarters of coverage or credits formula.

“To be eligible to receive a full menu of Social Security retirement benefits (other than disability insurance), an individual needs 40 credits,’’ he says.

In his chapters on taxation of Social Security benefits and Medicare contributions, Sarenski helps the reader navigate the thicket of provisional income, quarterly estimated tax payments and income thresholds.

As of 2013, high earners (more than $200,000 for individuals; more than $250,000 for joint filers) pay another 0.9% in Medicare payroll tax, bringing their share to 2.35% of their wages.

“Note that the tax applies to earned income more than the income thresholds, rather than to adjusted gross income.’’

As of 2020, earnings of up to $137,700 are taxed at 6.2 percent for the non-Medicare element of Social Security (retirement, survivor or disability benefits).

Sarenski provides sample tax scenarios that can reduce tax burdens, such as the single, non-working tax filer who was able to reduce a Medicare contribution tax on $2 million in net unearned income by applying the $200,000 single taxpayer threshold.

Sarenski says that money deducted from Social Security retirement benefits when a worker has earned income over the limit, is returned when the worker reaches full retirement age. The benefits are recalculated to provide a credit for the reduced benefits.

The chapter on the future of Social Security and Medicare says that in 1950, 16.5 workers paid in retirement benefits for each retiree; by the year 2030, “the ratio will be approaching only two workers paying in retirement benefits for each retiree.’’

A large baby boom population in retirement, lower birth rates producing fewer workers to pay for benefits and growth in Medicare beneficiary expenditures exceeding growth in per capita GDP, demand action be taken. Sarenski says legislation to avoid shortfalls for beneficiaries is needed urgently. He includes 10 proposals currently under consideration.

“No doubt, the future of Social Security will continue to be a major political and social issue.’’

Social Security and Medicare: Maximizing Retirement Benefits by Theodore J. Sarenski. Wiley. $97.

Eleanor O’Sullivan is an award-winning journalist who writes for Financial Advisor.