Retirement planning is something that many people ignore until it is too late. A belief in certain myths about Social Security and Medicare is at the root of some of the procrastination and cavalier behavior.
We would like to look at three of these myths here.
1.) Social Security will provide me with a solid income during my retirement years.
Unfortunately the above statement is patently untrue for most people.
We are all aware of the cost-of-living here in the greater San Jose and Santa Cruz area. At the end of 2012, the average monthly Social Security benefit was just $1,262.
The cost-of-living steadily rises, but Social Security inflation adjustments are miniscule. Plus, there is talk about reducing the rate of these adjustments.
Even the maximum benefit of $2,513 (this is the 2013 maximum) is not going to provide the type of retirement that many people envision. And, to qualify for this you must have paid the maximum amount allowable into the program for 35 years.
2.) Medicare will provide me with free health care when I reach the age of 65.
Under currently existing laws, people who paid into the program sufficiently become eligible for Medicare coverage at the age of 65. However, there are out-of-pocket costs like deductibles and premiums. Your Medicare Part B premiums are deducted from your monthly Social Security benefit.
3.) If I need nursing home care, Medicare will pay for it.
This is another falsity. The Medicare program will only pay for up to 100 days of convalescent care. It will not pay for an extended stay in a nursing home or assisted living community.
You have every reason to be concerned about the future given these facts. If you would like to discuss strategies for aging with a licensed professional, contact our firm to schedule a free consultation.