September 2022 Newsletter
September 2022 Issue
When Should You Start Taking Your Social Security Benefits?
You may think the answer to this question is easy – receiving your benefits as soon as possible sounds great, right? But perhaps there is a better strategy for you. In fact, many advisors will actually recommend that you wait as long as possible to begin collecting your Social Security benefits.
But why? The short answer is that if you begin collecting your benefits immediately, or early, your total benefit will be greatly reduced. Whereas if you wait a few more years, the opposite will happen; your retirement benefit will actually increase in value.
Of course, every situation is unique and the best time to take Social Security benefits is not the same for everyone. You have to consider your unique financial needs, health, and post-retirement plans when deciding what is right for you.
Let’s look at the numbers.
First, you’ll need to determine your retirement age, or the age at which you can collect 100 percent of your benefit. Your full retirement age depends on when you were born. For people born in 1937 or earlier, the full retirement age is 65. For those born in 1938 and beyond, the full retirement age rises gradually to 67.
According to the Social Security Administration, you can start taking your benefit as early as age 62. But, let’s say your full retirement age is 67. If you take your benefit early, it will be reduced by approximately:
- 30 percent if you start collecting at 62
- 25 percent if you start collecting at 63
- 20 percent if you start collecting at 64
- 13.3 percent if you start collecting at 65
- 6.7 percent if you start collecting at 66
In short, if you start collecting early, your retirement benefit will be permanently reduced by a larger percentage than if you are able to wait. And the benefits of waiting don’t stop there. In fact, if you are able to wait until after your full retirement age, you’ll be rewarded.
Let’s assume your full retirement age is 66, then you can receive 108 percent of your monthly benefit by waiting until age 67. If you wait until the age of 70, your monthly benefit rises to 132 percent. Therefore, based purely on the numbers, you can see why many advisors recommend waiting.
Understandably, many people will say they worked long and hard to earn their benefit and want to start enjoying it as soon as possible. There are also certain situations where taking your benefit early makes financial sense, such as if you are in poor health or in need of income.
There’s no “wrong” answer, but an experienced estate planning law attorney can help you determine the best strategy for you.
Know Your Options: The Spectrum of Long-Term Care
There are a myriad of options when it comes to long-term care. But, which is the best option for you or your loved one? This overview will give you a general idea of the options out there, but we highly recommend consulting with your family, a qualified Geriatric Care Manager, your doctor, and an experienced elder law attorney before determining the best plan for you or your loved one.
In-home assistance is best for those who are able to and plan to continue to live primarily on their own. Someone can come to your home to help with cooking, cleaning, transportation, or even personal care.
In Massachusetts, the State Home Care Program provides support services for individuals aged 60 and older so they can remain in their own homes. This in-home assistance option includes services and support to assist with personal care and other activities such as housekeeping, grocery shopping, and meal preparation.
Another popular in-home option is to live with your family in their home. Some families choose to add on to their existing home or seek a new home with an “in-law” suite or separate room. Having aging parents at home can provide peace of mind and help reduce living costs that can otherwise be redirected to care and support.
There are many community assistance programs and services that also help seniors continue living at home safely, such as senior centers and volunteer programs that help seniors stay engaged in their communities. One well-known service is Meals on Wheels, which is focused on providing nutritional support to seniors in the community.
There are also community programs to support caregivers, such as support groups and counseling services. For example, the Massachusetts Family Caregiver Support Program (MFCSP), provided through the Executive Office of Elder Affairs, offers one-on-one consultation with a family caregiver specialist to meet the caregiver’s individual circumstances and needs. Services in MFCSP include:
- One-on-one counseling to assist with decision making, assessing options, and solving problems
- Caregiver training
- Support groups
- Financial counseling including linkages to Community Mainstream Program and Food Stamp eligibility
Continuing Care Communities
Independent living and retirement communities are excellent options that provide an active, self-sufficient lifestyle for seniors. While similar, each offers a different experience for its residents.
Independent living communities range from apartment complexes to gated communities. They often have wellness centers, swimming pools, and other options for seniors to remain active. These communities usually offer housekeeping and outdoor maintenance services so that the resident is able to focus on enjoying retirement.
Retirement communities will offer similar amenities for seniors to those found in independent living. However, residents in retirement communities usually need to hire and pay for their own housekeeping or outdoor maintenance services separate from the amenities offered by the community.
In Massachusetts, the average monthly cost of assisted living can range from $6,000 to $9,000 across the state.
Hospice and Respite Care
Hospice programs provide care and support to those who are terminally ill so they can live as comfortably as possible in their home, a nursing home, an assisted living facility, or an outpatient facility. Medicare is the primary payer for hospice services, covering costs associated with the member’s terminal illness. While the member is enrolled in hospice, Medicare will pay hospice providers a per diem rate to cover the costs the provider determines the member needs related to their illness. MassHealth is responsible for covering additional costs Medicare will not cover, such as the patient’s other doctors’ appointments not associated with their illness (for example, the dentist).
Respite care is a short-term option for care as well. Often respite is offered as a very short inpatient stay so that a hospice patient’s caregiver can have an opportunity to rest and recharge. However, it can also be in the form of an adult day care that provides a safe and social environment for older adults. Since the specifics of what respite care could look like vary, the costs of respite care vary as well depending on the program and offerings.
Subsidized Senior Housing
There are many kinds of subsidized housing programs, but most programs work in the same way. Individuals who have low incomes will pay a portion of their income towards their rent, and the state or federal government will pay the difference. Subsidized senior housing is offered in Massachusetts.
In most programs, low-income means that your income is at or below the area’s median income. Each program sets income eligibility standards, but the U.S. Department of Housing and Urban Development (HUD) administers the Federal aid local housing agencies (HAs) use to assist low-income residents.
HUD sets lower income limits at 80% and very low-income limits at 50% of the median income for the area where you live. According to HUD, in Massachusetts the Median Family Income is $120,400, meaning for one person the:
- Low-Income (80%) Limit (LIL) is $62,600
- Very Low-Income (50%) Limit (VLIL) is $41,600
However, income limits vary from area to area so you may be eligible in one HA and not another, even within the state. Other eligibility requirements include qualifying as elderly, U.S. citizenship or eligible immigration status, and a reference check to ensure you will be a good tenant.
When you and your family are ready to decide which long-term care option will work best for your family, we at Lannik Law will be able to help you determine the best long-term option or options for you or your loved one.
A Personal Note From Susana
This month our newsletter addresses both the Medicare Benefit and other community services that are potentially available to just about all Americans. And on the 29th, we host Russ Swallow a known expert in Medicare in our Beyond the Law series to expand on what you read in the newsletter. Please be sure to join Russ. It promises to be a very interesting and informative discussion. I’m personally hoping to learn a great deal.
This newsletter and Russ’s talk come hard on the heels of my return from a Safari in Kenya and Rwanda (see photos taken by my son Sam Gorstein). I mention this because while I was in both of these countries, I was struck by the fact that there appear to be no social benefits like these for their people that are government sponsored. If the “bottom falls out” in the form of drought, loss of livestock and starvation, which is what is happening there, people truly suffer. I was thinking that what is offered here is really amazing when it is set beside what is not offered there.
We don’t realize how fortunate we are! People in those countries must work or they don’t eat or get medical attention. They also don’t rise on their social ladder without working. There are some international initiatives to help such as Doctors Without Borders, and the United Nations. But these do not feed all of the hungry children or assist all of the aging parents.
The elderly are generally revered in both Kenya and Rwanda and are usually cared for, by their families. But social norms like this respect and caring are beginning to change with modern times. Sometimes the elderly are left behind. They sit in their homes if they are unable to work or move. Women are beginning to find their voice in their societies and children are given priority with few resources because they are the hope of the future.
Despite all of the hardship that we saw, both Rwandans and Kenyans are productive, warm and creative people. I cannot praise them enough. Most specially the ones that helped me get up the mountain to see the Gorillas. That was an experience of a lifetime! But the Giraffe are my favorites.
The Rwandans make baskets they call “peace baskets” from the same materials referenced as Moses’ basket. Yes, the Nile IS in Rwanda. In both Kenya and Rwanda people are working to preserve all animals, especially the rare and endangered ones, with a special love and vigor, that I wish we could see here. They have come to realize that that preserving the animals and remembering their own culture is their future.
As for us, let’s be grateful for what we have.