Month: October 2023

Each October, the Social Security Administration (SSA) announces how much, if any, benefit increase Social Security recipients will receive the following January, depending on the rate of inflation. As the 2024 increase is set to be less than that announced for 2023, retirees may be wondering what impact the Social Security adjustment will have on their Medicare costs next year. Here are some commonly asked questions about the changes coming, as well as tips to keep your Medicare costs lower, regardless of how much your Social Security benefits rise.

What is the COLA for 2024?

The cost-of-living adjustment (COLA) for 2024 is 3.2%, which the SSA estimates will raise the average monthly retirement benefit by about $59, to $1,906. Those currently receiving benefits should receive notification of their increase via their online Social Security account before the end of December and will receive the increased amount beginning in January. While this increase is considerably less than the 8.7% bump for 2023, which made plenty of headlines when announced last year, it is still higher than the 2.6% average over the past 20 years.

Will the COLA be enough to offset an increase in Medicare costs?

Medicare Part B and Part D are the coverage options most susceptible to annual changes in costs. Medicare Part B covers medical services like doctors’ visits and outpatient care while Part D covers your prescription drugs. It’s generally best to have Part D coverage as well, especially as you age and may require specific medications.

The SSA typically deducts Medicare Part B premiums from Social Security benefits, so as many recipients know, the financial impact from an increase in Social Security benefits may be muted. While there have been years in which Part B premiums remained unchanged from year to year, in 2023, the standard premiums decreased for the first time in over a decade, which allowed recipients to benefit more from the 8.7% COLA. This year, the Centers for Medicare & Medicaid Services (CMS) announced 2024 Part B premiums earlier than anticipated. The standard premium will increase next year by $9.80 to $174.70. This is lower than some feared and means Social Security recipients whose Part B premiums are deducted from their monthly benefits can still expect some increase in income next year given the recently announced COLA.

How else might my Social Security benefits affect Medicare costs?

It’s important to consider that an increase in Social Security payments could actually raise your Medicare costs if it pushes you into a higher income threshold. That’s because your income can affect your Medicare premiums for Part B and Part D coverage. People with high incomes (over $97,000 for a single individual and over $194,000 for a married couple in 2023) pay higher premiums for Part B and Part D.

If you earn over the income thresholds, which are announced annually, you’ll pay an income-related monthly adjusted amount (IRMAA) – a surcharge added to the Part B and Part D premiums. If your income is slightly below the tier, the increase you receive in Social Security income may push you over that threshold, causing you to pay a higher amount for both Part B and Part D benefits. Based on the recently announced changes for 2024, the tables below indicate how your income level can affect your Medicare Part B and D premiums.

Medicare premiums are based on a two-year lookback framework, meaning Social Security reviews your tax return from two years prior. Therefore, for 2024 rates, Social Security will use your 2022 federal tax return to determine which of the tiers you fall under.

Medicare Part B income-related monthly adjustment amounts for 2024:

Medicare Part D income-related monthly adjustment amounts for 2024:

Strategies to keep Medicare costs under control

To prevent your Medicare premiums from rising based on a change in income, it’s best to consult a team of financial professionals who can help apply tax strategies that include being mindful of IRMAA. We also recommend reviewing your Part D plan annually to ensure it meets your specific needs. Even if your medications stay the same, individual plans may adjust their prescription costs, preferred pharmacies or the drugs they cover, so it can be helpful to review this with your financial advisor each year.

Legislative changes stemming from the Inflation Reduction Act of 2022 should also help reduce health care costs for Medicare recipients. One particularly impactful change that should help Medicare Part D recipients save money is the elimination of the donut hole, a coverage gap in which individuals are not covered for their prescription costs and must pay out of pocket. This change will cap overall Medicare Part D costs at $2,000 annually per individualstarting in 2025.

Another change to Medicare Part D plans that went into effect in 2023 relates to insulin-related costs. For those on Medicare, the cost is now limited to a maximum copay of $35 per month. This should provide savings for insulin-dependent diabetics who have grappled with the rising costs of this medication over the last decade or two.

Your financial advisor can help

Historically, Medicare premiums have risen faster than Social Security COLAs. However, when factoring in the upcoming legislative changes to Medicare benefits, as well as incorporating health care planning with your financial advisor, there are plenty of strategies to reduce your Medicare costs that can lead to significant savings over the long term.

The above considerations are just a handful of ways a financial advisor can help review your Social Security benefits and suggest strategies to lower Medicare costs. Please reach out to your advisor to discuss the best options for your situation. If you are not presently working with one, we would love to help you. Please schedule a short phone call or virtual conversation with our team.

Steve Weiss, CFP^®

Steve Weiss is a seasoned wealth advisor with a passion for empowering others through financial knowledge. Using a client-centered approach, Steve takes the time to meet his clients where they are in life, understanding their unique needs and concerns, whether they are planning for retirement or facing other financial decisions in the near future. Additionally, Steve’s understanding of Social Security matters has made him an invaluable resource for clients.

Angela Muckler
As an Associate Regional Director, Angela is dedicated to providing support to advisors and their teams in various aspects of their business. Her goal is to build a strong relationship with every individual she works with, better understand the challenges they face and look for opportunities to help them grow. Angela’s passion for comprehensive financial planning and problem solving enhances her ability to connect firms with resources that ultimately help their clients.

For informational and educational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. Certain information is based on third party data information and may become outdated or otherwise superseded without notice. Individuals should speak with a qualified financial professional based on their circumstances. Third party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency have approved, determined the accuracy, or confirmed the adequacy of this information. R-23-6359

We recently released our latest Quarterly Outlook, and the main takeaway is that inflation is still cooling and is now at 3.7% on a year-over-year basis.

This represents a significant improvement from the peak last year, but it is still materially above the Fed’s long-run target of 2%. In this week’s Buckingham Perspectives, Chief Investment Officer Kevin Grogan provides an overview of the latest Quarterly Outlook and highlights the key takeaways, risks to the economy and sources of stability.  

Click here to view the full Quarterly Outlook for Q4 2023.

If you have any questions please feel free to drop us a note.

For informational and educational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. Certain information is based on third party data and may become outdated or otherwise superseded without notice. Third party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. The time frame chosen because of the dates of available data. The inception of the AIEQ ETF was 2017. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio nor do indices represent results of actual trading. Information from sources deemed reliable, but its accuracy cannot be guaranteed. Performance is historical and does not guarantee future results. All investments involve risk, including loss of principal. Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency have approved, determined the accuracy, or confirmed the adequacy of this information.

Over the past several decades, women have increasingly taken on the responsibility as their family’s primary or sole breadwinner. This rising role has prompted a different approach to comprehensive financial guidance. Wealth Advisor Alyssum Malone, CFP®, BFA™ shares how partnering with a professional can help ensure your family’s finances are protected for years to come, no matter what situation may arise.

For much of the past century, men have customarily been the breadwinner in most families. However, over a dynamic era of progress spanning the past several decades, the role of women as financial providers has significantly increased. In fact, it’s becoming more common for women to be the primary or sole wealth contributor in their family. These powerful statistics illustrate this growing trend:

• 16% of married couples now have a woman who earns more than her spouse, up threefold from the 1970s, according to Pew Research.
• In 40% of families with children under 18, the mother is the primary breadwinner, according to Pew Research.
• As women currently outnumber men almost 3 to 2 on college campuses, the number of female breadwinners is likely to increase in the future, according to the National Student Clearinghouse.

The rising role of women as providers has prompted a different approach to comprehensive financial guidance. Utilizing the resources and experience of a financial professional is a great starting point to ensure long-term security for your whole family.

How can partnering with a wealth advisor help?

Managing finances is often a stressful and time-consuming task. Partnering with a financial planner takes more things off your to-do list. While getting time back in your busy schedule is invaluable, the peace of mind knowing your money is being managed by a professional is arguably one of the most valuable benefits of working with a wealth advisor. A recent study by the Life Insurance Marketing and Research Association (LIMRA) revealed that 40% of women respondents working with an advisor feel “very prepared” for retirement versus 27% of respondents without an advisor.

When one spouse is the sole or primary breadwinner for a family, certain financial planning considerations become even more important. These components should be top of mind in your overall financial plan:

Life insurance: While life insurance is essential for many families, it’s even more important for families when most or all of their income stems from one person. If you are considering adding or increasing life insurance for yourself or another family member, ask yourself these questions:

• Would your family be financially sound if the worst were to happen?
• Does the spouse earning less also need protection?
• If you have children, would your spouse’s Social Security survivor’s benefit be enough to cover childcare?
• What about other things your spouse currently takes care of? Would you need to hire a house cleaner or begin paying for laundry service to replace the things a stay-at-home spouse does around the house?

An advisor can help you navigate these conversations to make sure you have adequate coverage in place.

Disability insurance: How would your family manage if you were to become disabled and unable to work? Your spouse may find employment but may be unable to bring in a similar income as you were making. This is where disability insurance kicks in. Keep in mind this income protection insurance typically does not replace 100% of your salary, so working with an advisor to make sure your family will be able to cover expenses is very important.

Emergency savings: I cannot emphasize this enough – any family or couple relying on a sole income needs a larger emergency fund. If you lose your job, you need to ensure you have liquid savings in place while you search for another. A financial advisor can help you to determine the correct amount to ensure your bills will be covered.

Goal planning and prioritization: Single-income families typically make less overall than dual-income families, which can make cash flow tighter and therefore potentially lower the rate of savings. Collaborating with a financial advisor can help to assure you’re on track to meet your short- and long-term goals or make the changes necessary to get there.

Tax planning: Working with a professional who understands your tax and income situation can help your family minimize liabilities whenever possible and make sure you are taking advantage of tax-efficient savings strategies.

Executive and stock compensation planning: Top-tier managers and key employees may be eligible for executive and stock compensation incentives. This can lead to a substantial increase in income. While this can be exciting and rewarding, it can also lead to more financial decisions. An advisor can help ensure you’re taking advantage of these benefits in a tax-efficient manner.

The above considerations are just a handful of ways a financial advisor can help protect families who rely on a primary or sole provider. Please reach out to your advisor to discuss the best options for your situation.

Note: The statistics shown above are by no means telling for all families in these situations. Each family is unique and structures household tasks and other items discussed differently. This article also focuses on heterosexual couples as this is where most of the research on breadwinner dynamics has been focused. All the planning needs outlined above are important for LGBTQ+ couples as well. For more information, click here.

For informational and educational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. Certain information is based on third-party data and may become outdated or otherwise superseded without notice. Third-party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. Individuals should speak with qualified financial professional based on their circumstances. Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency have approved, determined the accuracy, or confirmed the adequacy of this article. R-23-6103

Over the weekend, Congress passed legislation to enact a 45-day reprieve of any imminent government shutdown fears. However, this won’t get us through the end of the year.

In this episode of Buckingham Weekly Perspectives, Head of Investment Research Jared Kizer explores the impact of a government shutdown from a political and historical perspective, the near- and long-term risks from an investment strategy perspective, and three ways investors can manage this risk.

Source: Vanguard

If you have any questions please feel free to drop us a note.

For informational and educational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. Certain information is based on third party data and may become outdated or otherwise superseded without notice. Third party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. The time frame chosen because of the dates of available data. The inception of the AIEQ ETF was 2017. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio nor do indices represent results of actual trading. Information from sources deemed reliable, but its accuracy cannot be guaranteed. Performance is historical and does not guarantee future results. All investments involve risk, including loss of principal. Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency have approved, determined the accuracy, or confirmed the adequacy of this information.