“The Medicare increase is a one-time wallop,” says Dr. Katy Votava, founder and president of GoodCare, a health-care costs consulting firm and website. “The cost is supposed to come back down the next year.” Medicare costs have gone up, and back down, in the past, so a decrease is not unprecedented.
Also, the potential increase for next year is not a done deal. President Obama opposes it and Congressional leaders were working toward some kind of compromise before Speaker of the House John Boehner’s resignation threw Congress into chaos.
“I don’t know where else you can get a guaranteed 8 percent increase in your investments every year, so if you are holding off on taking Social Security to let it grow, it is probably not worth taking it earlier than planned,” says Alina Lee, director of financial planning at Cassaday and Company Inc., a financial services firm based in McClean, Va.
Lee is referring to people who have not taken early Social Security benefits or have delayed Social Security past their full-retirement age. Benefits increase by about 8 percent a year for each year they are delayed until age 70.
“You could go to a calculator to see which is more advantageous, but the further you are from the age you want to retire, the less beneficial it would be to take benefits now,” says Votava.