The existence of certain institutions can lead you to overconfidence when it comes to retirement. You may feel as though retirement planning is really not important, because there is already a system in place that will automatically provide you with a comfortable retirement.
When you pay FICA taxes, you earn retirement credits. You can obtain as many as four credits in a calendar year, and you obtain eligibility for Medicare and Social Security when you accumulate at least 40 retirement credits.
Since you get one credit for every $1220 that you earn in 2015, you can see that the eligibility requirements are relatively modest. If you have worked for any length of time during your life, you will qualify for these retirement benefits when you attain senior citizen status.
It’s great to recognize the fact that you will qualify for Medicare and Social Security. However, you should understand the limitations.
The exact amount that you will receive from Social Security will be calculated based on the 35 earning years during which you earned the most amount of money. During the current calendar year, the average monthly benefit for a single recipient is $1328. For a married couple, the average monthly benefit is $2176 when each spouse is receiving a benefit.
As you can see, these are very modest numbers. Even the maximum monthly Social Security benefit of $2663 per month is not going to provide the kind of lifestyle that many people envision when they look ahead toward their golden years.
When it comes to Medicare, there are monthly premiums that must be paid for Part B and Part D. Medicare Part B is the portion of the program that pays for visits to doctors and outpatient care. Part D is the prescription drug program.
Medicare Part A is the hospitalization portion. There is a deductible for hospital stays, and there can be co-payments for extended stays.
In addition to the above out-of-pocket expenses, there is a very big void in the coverage. Most people will need long-term care eventually, and Medicare does not pay for custodial care. We practice law in New York, and the average annual cost for a room in a nursing home in our state is well over $100,000.
When you fully digest the statistics, you can see why retirement planning is in fact quite important if you want to be comfortable during your senior years. If you act in an intelligent and informed manner early on, you may be able to accumulate to resources that you need to enjoy your elder years to the fullest.
If you are ready to take action, our firm can help. We offer free consultations, and you can send us a message through our contact page to schedule an appointment: Smithtown NY Retirement Planning Attorneys.