How Medicare Relates to Social Security

Identifying the right start dates for Social Security depending on your unique situation, when your Social Security benefit will send you your first check based on your birthday, and IRMAA cost strategies.

Every month I take an episode of “Retirement Revealed” to answer listener questions about retirement, Social Security and real life financial scenarios that I think other listeners could benefit from exploring. This month, we dive into a topic I recently produced a video on–which I’ll provide a link to below)–a clarifying question about Social Security income related to Medicare and a closer look at income-related monthly adjustment amount (IRMAA).

0:45 – Social Security Scenario: I turned 67 in January. My wife will be 62 in October. She does not have Social Security on her own. We both expect to live to 82. When should we each start?

The optimal timing for claiming Social Security benefits takes into account individual life expectancies rather than relying solely on averages. I recommend people use a service like www.longevityillustrator.org to find your own personalized life expectancy estimate. Another important thing to keep in mind is the strategy that can come into play for couples with an age gap. You may be able to maximize your survivor benefit by delaying one of your benefits. 

5:08 – SS + Medicare Question: I will claim Social Security when I turn 70 on Dec. 22. Will I receive my first check in December or January? Will my Medicare come out of that?

Social Security benefits are typically paid the month after your birth month. You have to have lived through your Social Security month in order to collect your first check. Medicare operates similarly–and yes, it is taken out of your Social Security. If you’re taking Medicare but you aren’t yet on Social Security, you’ll have to set up a different way to pay for Medicare. One way that works for many people is using “Medicare Easypay” and have your payment automatically deducted from your savings or checking account.

9:09 – Income-Related Monthly Adjustment Amount (IRMAA): We have to pay extra for Medicare this year. Is it every year? How is it calculated and can I avoid that?

When dealing with IRMAA, it’s important to proactively plan your income to minimize costs. IRMAA income thresholds are calculated based on your income 2 years prior, and if your income is higher than the threshold, you pay more for your Medicare coverage. Knowing this  threshold is $120,000 in income for a single person and $206,000 for a married couple allows you to plan ahead with how you structure your income and avoid paying that extra amount for Medicare on an annual basis.

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Additional Links:

• Longevityillustrator.org 
• SSA: The United States Social Security Administration
• How to Know When to Start Social Security – Mr. Retirement Video

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