pensions and social security

 

Pensions and social security are encouraging you to take your benefits early, meaning before you reach the age where you collect 100% monthly benefits. Normally speaking this is NOT in your best interest. You will receive less benefits, meaning money, which you could spend on yourself.

What to watch out for:

They send you a notice that you are old enough to start receiving your benefit, but not 100%. It will say on page 34 in the fine print that you will receive a reduced amount, say 80%, for life. You will get ripped off 20% in this example. By simply waiting 2-3 more years you get more every month for life! You've waited 40 years, what's the rush?

 Another ploy social security uses is Medicare. You are required to start Medicare at 65, but Your full 100% social security benefit will start around 66.5 to 67 years old. The minimal Medicare required by law is paid by the government, but doctor visits and drugs cost extra, which you have to pay, if you choose to add doctor visits and drugs. So, they encourage you to add doctor visits and drugs at 65, then they encourage you to start social security early to pay for it. Generally you are better off to wait till social security pays you 100%. Treat the Medicare as medical costs that you deal with separately. They will threaten you with a Medicare 10% penalty each year you delay the doctor visits and drugs, and the Medicare plan is generally cheaper than other plans, so you may choose to pay it out of pocket if you have no other medical plan, but do NOT start social security early.

Unfortunately the world is a very evil place. Why don't they encourage you to do stuff that makes sense? Why don't they want you to get your full benefit that they set up in the first place? It's all a very big cluster mess. These plan administrators think they are saving the government or the pension plan money. But for the most part the money is simply numbers in a computer somewhere. Especially in the government case, they simply create money by typing numbers into a computer. So you might as well get your full benefit and spend it.

Some social security and Medicare details:

In simple terms social security sends you money every month when you are old. Medicare is a government program that helps pay for some medical costs when you are old. Medicare is run by social security, so it's all tied together. The same department handles both. This allows social security to pay Medicare your monthly Medicare bill automatically, if you agree. As usual there is evil involved, the two programs start at different ages, and mess with your benefit amount, meaning money.

Some Medicare terms:

Part A - This is free to you, needs to start at age 65, and covers some hospital stay costs.

Part B - This costs you each month, you can start it at age 65, and covers some doctor visit costs.

Part C - not used 

Part D - This costs you each month, you can start it at age 65, and covers some drug costs, like medicine and pills. This also may cover some dental and visions costs.

Another money gouging trick:

Notice that "some costs" are covered, but in some cases you could still owe $10,000 or more out of pocket if you get sick. The answer? More private health insurance to make up the difference. This costs you more money every month. You would be billed separately each month by a private company if you set this up.

Tricky lingo:

Pensions may send you a notice that you have "deferred payment" of your plan. This sounds like you've failed to start getting money from your plan. What this may be saying is, you haven't started EARLY REDUCED payments from the plan. Or you have deferred getting reduced payments. What a mess.