Medicare Drug Plans February 14, 2009
Posted by zzsutton in Social Security.Tags: Medicare, Medicare Drug Plan, Medicare Part D, Social Security
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You can find a description of Medicare and a definition of the various “parts” of Medicare at Future Years and some more detailed information on the Medicare Drug Plans.
The Medicare site has a moderately useful tool to help you choose a drug plan. You enter the drugs you are taking, and the tool returns a number of drug plans in your area, including a number sorted by expected cost of premiums and drugs.
While anyone may purchase a Medicare Drug Plan, there is a means (income) test that can effect the cost of the plan. Largely, these plans divide drugs into three categories, ranging from generics (which have small or no copayment) through “non-preferred” (brand name) drugs, which may have substantial copayments.
Applying for Medicare February 13, 2009
Posted by zzsutton in Medicare, Social Security.Tags: Medicare, Social Security
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I’m now a couple of months from Medicare age, so I decided it was time to find out more. Here are a few important lessons I’ve learned:
You can apply for Medicare without penalty in a 6 month window (3 months before to 3 months after) around your 65th birthday. For more information, click here.
Lesson 1: Apply for Medicare as soon as you are able. Getting your Medicare card will take 30-45 days, and the Medicare card will come with lots of other materials that MAY be beneficial (not sure–I haven’t gotten mine yet).
Online registration for Medicare is not offered at this time; you can register for Medicare by calling 1-800-Medicare or by going to a local social security office. You can register for supplemental drug coverage on line. I went to the local Social Security office and was quite disappointed to find that the person with whom I met could register me for Medicare but could not answer ANY of my Medicare questions.
Lesson 2: Always make an appointment before going to the Social Security Office
Lesson 3: Assume the people at the Social Security office won’t know anything about Medicare.
Lesson 4: Register for medicare over the phone directly with Medicare.
Lesson 5: The Medicare.gov web site has lots of good information and a moderately useful tool for determining candidates for Part D (prescription drug benefits) plans you might choose.
Lesson 6: Supplemental medical plans are standardized into plans identified by letters (e.g., A,F, J, etc). You should choose which plan best meets your needs and then look at insurers serving your area to compare costs and participants’ evaluations of the plans (available at medicare.gov)
Lesson 7: The choice of supplemental medical plans and drug coverage plans is much more difficult than it should be.
Lesson 8: Sign up for Medicare on time. There is a lifelong cost penalty for not doing so.
Social Security Spousal Benefits October 15, 2008
Posted by zzsutton in Social Security, retirement planning.Tags: full retirement age, Social Security, spousal benefits
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I read the October 2008 AARP Bulletin “Ask the Experts” column with great interest. The final question in that column was from a woman (62) asking about receiving spousal benefits from her husband’s account (the husband was 64) while he continued to work.
The answer published in that column was as follows: “Yes, it is possible for a worker to sign up for Social Security and immediately ask to have the payment delayed until the year he wants to start receiving benefits. This would allow you to receive the spousal benefit now while your husband, by suspending his payment, continues to allow the value of his future benefit to grow.”
This seemed to contradict information I previously received in a meeting at the Social Security office, which is detailed in an earlier post. So, I called up Social Security and asked them about the apparent difference.
The agent with whom I spoke said that they had received a number of calls about the AARP article and that the response in the “Ask the Experts” column was largely incorrect (and specifically incorrect in the situation as stated).
The agent said that spousal benefits were only available when the other spouse had “retired” (i.e., started receiving benefits from Social Security), and that the deferral scheme would not work unless the primary spouse had already reached full retirement age (as defined by Social Security). This, of course, is not the case as postulated in the question.
So, one can only get spousal benefits if the other spouse has already started drawing Social Security benefits or is beyond “full retirement age” and either draws Social Security benefits or files to draw and then defers benefits.
This might be a good strategy if the primary wage earner continues to work past full retirement age and the spouse chooses to draw spousal benefits before reaching full retirement age, but the strategy suggested in the AARP Bulletin appears not to work if the primary benficiary is under full retirement age and not actually collecting benefits.
A Visit to the Social Security Office–What you should know August 3, 2008
Posted by zzsutton in Medicare, Social Security, retirement planning.Tags: early retirement, maximize social security, Social Security, spousal benefits
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My wife and I visited the local Social Security office.
Hint: get an appointment first, that way you can get a case-worker who really understands Social Security rather than the generalists who work the counter.
The main point of interest was whether either one of us (or both) should take early retirement, wait until full retirement age, or even wait until some later age to begin drawing benefits.
We still work part time, so we have some income. If you choose to retire prior to your “full retirement age” according to Social Security (you can check the table showing your “full retirement age”), your monthly benefits will be reduced and you may run afoul of the income test which would tend to further reduce the yearly benefits to which you are entitled.
One of the unexpected findings (for us) was that you must estimate your income for the year, and then the total amount of benefits to be withheld are simply not paid at the beginning of the year. So, for example, you may not receive ANY benefits for the first 6 months of the year.
The good news is that withheld benefits are not lost; they are paid later (after you hit fill retirement age). The bad news is that these benefits lose the “compounding” effect that simply retiring at a later age gives you. That is, your monthly benefits will be higher if you retire later than if you postpone benefits by working and running into the earnings limit. The other thing that became obvious is that if your earnings are sufficient to reduce your benefits, the only logical time to start drawing social security benefits is in January.
We were never able to get a good answer as to what happens if you estimate your earnings substantially incorrecty. Since our earnings are from businesses, and one of them is highly seasonal around the end of the year, it is difficult to predict income.
Also, some financial advisors recommend one spouse take spousal benefits as early as possible and postpone taking their own benefits until at least full retirement age. We discovered this to be overly simplistic. First, one cannot take spousal benefits until the spouse begins taking social security benefits. Secondly, if the spouses have had substantially different earnings and/or work history, the spousal benefits (generally 50% of the other spouse’s benefits) may always be higher than one’s own full retirement age benefits. That is the case for us.
Also, one’s benefits are calculated by looking back over the entire earnings for the highest 30(?) earning years. So we had assumed that if we did not take benefits early, we should attempt to maximize my spouse’s income through full retirement age. But, that turns out to make no difference in our benefits. Instead, it is most beneficial to maximize my income, which will both raise my full retirement social security benefit and, concomitantly, raise my spouse’s benefit, since she gets a higher benefit by taking her “spousal benefit” (i.e., based on my benefits) than by taking her own benefit.
Who woulda guessed?
You should apply for Social Security benefits in the month you wish to receive them. However, you should remember that you always should apply for Medicare benefits about 2 months before your 65th birthday so that you have those benefits as soon as you turn 65. Failing to apply for Medicare before your 65th birthday can be very expensive over the rest of your retired life.
Approaching Social Security and Medicare June 13, 2008
Posted by zzsutton in Medicare, Social Security, retirement planning.Tags: maximize social security, Medicare, retirement, retirement planning, Social Security
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I’m getting close to that time when I need to spend some effort on understanding how to optimize my Social Security and Medicare choices. In fact, as I read more about Social Security (for example, at Future Years), it appears as if I and/or my spouse should have started Social Security when we turned 62.
There is one school of thought that claims the lower earning spouse should take spousal social security as soon as possible (normally 62) and then go to his/her own Social Security (if any) at “full retirement age” (which may be anywhere from 65 to 67, depending on birth year). I’m not sure I quite understand the math here, but I’m going to learn about it and continue to write about what I learn.
One thing I have learned is that most of the on line calculators (in fact, all of them that I’ve found so far) intended to help one choose when to start drawing from their Social Security fail to consider the time value of money. That is, these Social Security calculators calculate the age at which the total dollars earned if you take early Social Security equals the total dollars earned if you start drawing at full retirement age. The point these calculators miss is that dollars earned sooner are more valuable than dollars earned later–because I can invest the earlier dollars, for example, to increase the total dollars available at the same time.
One might conclude that if you had the discipline to invest and interest rates (or other investment return rates) were reasonably “good”, one might always come out ahead by taking Social Security earlier rather than later. This is something else for me to explore and report on.
I do know that I need to apply for Medicare before I turn 65 (about a year away).
Stepping Stones on the way to Future Years May 24, 2008
Posted by zzsutton in Medicare, Social Security, Travel Planning, retirement planning, travel.Tags: baby, baby gear, Baby Mine Store, clothes, future years, futureyears, stroller, tour, travel, travel planning
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My spouse and I purchased our first web site about 2 and one-half years ago. That web business is Baby Mine Store. As the name implies, it is a retail site for clothing and gear (e.g., strollers, furniture, car seats, bedding, etc.) for babies, infants, and toddlers. Baby Mine Store is a lot of fun and a surprising amount of work to run.
About a year later, we purchased a travel web site (Travour). Travour is based on an AdSense revenue model, so we strive to provide a broad range of information on general travel, honeymoon travel, cruises, adventure travel, etc., specialized by region (e.g., travel to Europe, travel to the U.S., travel to Asia, etc.).
We were fortunate to meet our friends from Compare Infobase, who originally constructed the site. This has turned out to be a most productive relationship which directly led Karin and I to choose working with them on the Future Years project.
Fun and Games Building The Future Years Web Site May 23, 2008
Posted by zzsutton in Medicare, Social Security, retirement planning.Tags: future years, futureyears, retirement, retirement planning
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A partner (Karin Hollerbach) and I decided to work with some business partners (Compare Infobase) to build a web site focused on retirement planning and, in fact, the needs, wants, and desires of those over 50. Initially, at least, we are aimed at folks in the United States.
We chose the name Future Years to represent the fact that many of us (I’m in the age group upon which Future Years focuses) need to know important information about the second half of our lives–such as volunteering, travel, medical tourism, retirement homes, second careers, social security, Medicare, etc., but that we don’t think of ourselves as old. I’ve been sailing in tropical waters for many years, skiing (including many years on ski patrol, and driving fast, red cars–and I don’t see any of those things changing as I go forward. So, Future Years is a web site built for people like me–to provide a reference set of resources to either allow me to answer my questions directly or to find a link to a site providing the answer.
How Karin and I Met…
The common thread is that Karin and I both went to undergraduate school at M.I.T.–albeit a generation apart. We met at a series of M.I.T. Club meetings focused on promoting entrepreneurship (this was about 7 years back). We both had roles in getting speakers and putting together an “architecture” for the program.
We very much enjoyed working together, so we’ve done a variety things together. I must admit that there were scarcely any women at M.I.T. when I attended, and I’m quite pleased that situation has changed. My younger daughter, who is a pediatrician in Seattle, also attended M.I.T. at a time when the male/female ratio was much closer to 1:1.
After M.I.T. undergraduate school, I got an S.M. (as M.I.T. is want to call it’s Master’s degree) from M.I.T.’s Sloan School of Management and then attended Stanford’s Graduate School of Business.
Karin holds undergraduate degrees in EECS and in Molecular Biology from M.I.T., an MS degree in Electrical Engineering from UC Berkeley, a PhD in Biomedical Engineering from a joint program at UC Berkeley and UC San Francisco, and an executive certificate from the Haas School of Business at UC Berkeley.
In any case, that brings us to the present and our collaboration on the Future Years project.
