Social Security and Medicare are generally misunderstood as social programs that only offer assistance to people who fall under the categories of low-income or disabled.
The truth is, these are actually multi-use programs that are mainly aimed toward the retired, or aging population who have previously paid into these systems during their careers. The paid-in funds go towards supporting people who currently use social benefits with the promise that funds will also be there when they retire. These funds are detrimental to retirement for a lot of people, which is why it’s vital to have accurate and accessible information available.
Social Security Program
The Social Security program was created during the 1930s, under President Roosevelt’s term, in the direct response to the devastation America had befallen during the great depression. Social security was the government’s cure-all to combating the poverty and destitution that was evident at the time in a lot of families and individuals. Since then, social security programs have grown and been reformed to include various other groups of people and their specific circumstances.
Medicare Program
The Medicare program started in the 1960s as a way to help provide medical care to people, specifically the elderly, that were otherwise unable to acquire health insurance traditionally. Medicare, just like social security, has grown since then, and now provides resources to disabled, sick, and low-income individuals. At its core, however, its main purpose is to serve the aging population as a way to help them receive health coverage in their later years.
What Do I Need to Know?
According to ssa.gov, individuals who qualify for social security benefits will be able to begin collecting as early as 62 years old. I need to point out that if you start collecting benefits before the “full” retirement age, which is 67 for those born after 1960 (and varies if you were born before) your benefit will be relatively reduced.
For example, your benefit at 62 will be 27.5% less than if you retire once you reach your full retirement age. You are also required to have 40 credits, which is around 10 working years give or take, of paying into social security to be able to receive benefits.
Review more details about this in this SSA publication (https://www.ssa.gov/pubs/EN-05-10035.pdf),
Even though you’re legally allowed and able to start receiving a higher benefit at full retirement age, if you can afford to, it may be worth your while to wait until you turn 70 years old. For each month that you wait to collect funds, you will see an increase in your future monthly check. This is up until you reach age 70, afterwards, there is no increased benefit. For every year beyond full retirement, you are eligible to receive an additional benefit of 8%.
For a lot of folks, especially those who are still earning, it’s a viable option to push off receiving your benefits so you can reach a higher long-term amount. There are other benefits for widows and widowers as well as children in certain cases, so make sure you inquire directly if you have any questions regarding these circumstances.
Referring to Medicare benefits, things work slightly differently. Waiting longer doesn’t benefit you as it does for social security. In fact, it can actually cause your premiums to go up. The SSA recommends that you sign up for Medicare approximately 3 months before you legally turn 65. If you are already enrolled in the social security program, this will happen automatically.
Note: If you are waiting to claim your social security benefits, you are required to sign up for Medicare manually. If you sign up late, you may be subjected to paying a late enrollment penalty.
When you’re prepping for your retirement, take your time and do your research. There is a ton of misguided information out there about both the social security and medicare programs. It wouldn’t hurt to seek out counsel from the administration directly for any equivocal questions, thus helping you to feel more confident regarding your retirement.