Show #276 Airing Sunday, December 5, 2004
Are you ready for a riddle? Okay. When does a raise mean you get less money? Do you have the answer? It’s when the government gives it to you.
Now, I know this riddle isn’t too funny. But, sadly, it’s true. The federal government just announced that folks on Social Security will be getting their cost of living raise in January. Your benefits will increase by 2.7 percent . On average, that comes to about 25 dollars more in your pocket each month. That’s 300 dollars a year. Not great, but it’s better than a kick in the teeth.
But don’t start planning how you’re going to spend it, because you’ll never see it. Why not? That’s because the same government that’s supposedly giving you a raise under Social Security, is taking the money back, under Medicare.
In January, your Medicare Part B premiums are going up 17 percent. This means you’ll have to take about 12 dollars per month from your Social Security raise and give it back to Uncle Sam.
Okay, so you get 25 dollars and pay back 12 dollars, that still leaves you with 13 dollars more each month. Not great, but better than a kick in the teeth.
But that’s not all. The deductibles that almost everyone pays under Parts A and B of Medicare are going up about 4 dollars per month. So subtract another 4 dollars, that leaves your Social Security raise at 9 dollars per month. Not great, but better than a kick in the teeth.
But we’re still not done. There’s lots more Medicare cost increases. For example, if you get sick next year and require a period of rehab in a nursing home, your co-pays are going up. Let’s say you’re in a nursing home for two months. The first 20 days are free, but the next 40 days will cost you $180 more next year than this year. That works out to 15 dollars per month. Uh-oh, now you’re behind. You’ve used up your entire raise, and then some. And this doesn’t even include some of the other Medicare rate hikes, such as co-pays for hospital stays.
So here’s the bottom line. When Uncle Sam offers you a raise, be prepared to look that gift horse in the mouth. Because it’s likely to cost you money.
Now, as long as we’re on Social Security, let me tell you about how our elected officials are “saving” Social Security. You’ve heard it from all the politicians on both sides of the aisle. Before the government started “saving” Social Security, you could retire at age 65 and get 100 percent of your benefits. Under the new rules, if you turn 65 next year, you don’t get your full benefits for another six months. If you are now 61, forget about retiring at 65. You won’t qualify for your full retirement benefits until you reach age 66.
Before our elected officials started saving Social Security, you could retire at age 62 with 80 percent of your full benefits. If you retire at 62 next year, you’ll only get 75 percent of your full benefits.
In other words, Congress has already started saving Social Security by delaying the retirement age. At this rate, our kids will be happy to know that Social Security will be saved for them. Only problem is, they’ll probably have to wait until they’re 100 to get anything! And if the annual cost of living raises continue like this year’s, by the time they do qualify, their benefits will cost them money.
