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Amid countless headlines about the projected Social Security shortfall that could necessitate a 23 percent cut in benefits by 2033, seniors are understandably frustrated by Congress’ failure to address the issue. But many future retirees aren’t aware the following factors could also diminish their Social Security income.

(1) In 2016, seniors who begin drawing Social Security before their full retirement age will see their benefits reduced by $1 for every $2 of earned income above $15,720. During the year they reach full retirement age, their benefits will be cut $1 for every $3 of earned income above $41,880 until the month they reach full retirement age. From then on, there are no reductions because of working.

(2) Legislation passed in 1983 and 1993 taxes Social Security benefits on recipients with rather modest incomes. An individual reporting income between $25,000 and $34,000 will see up to 50 percent of their Social Security benefits taxed. If their income exceeds $34,000, up to 85 percent of benefits is taxed.

(3) Medicare premiums for Part B and Part D can be greater if enrollees’ income exceeds set limits. Part B premiums can be as much as $389.80 a month for higher income individuals (based on modified adjusted gross income on their 2014 tax return). Individuals with a modified adjusted gross income of more than $85,000 in 2014 will also pay extra for Part D.

(4) A disparity between Social Security cost-of-living adjustments and increasing Medicare premiums is expected to grow. Since 2010, yearly COLA adjustments have been relatively low and at zero for three of those years. The Social Security Board of Trustees estimates the average COLA going forward will be 2.7 percent or less. But the Medicare Board of Trustees projects Part B premiums will increase by 5.76 percent annually through 2024, and Part D premiums will increase by 7.1 percent annually. According to a recent Motley Fool article, this could result in seniors paying 40 percent of their Social Security benefits to Medicare within 10 years.*

You may not be able to control legislation Congress passes affecting Social Security, but you can do your part to ensure your retirement is secure. Please feel free to call Jordan Dechtman, Denver Investment Advisor Representative at 303-741-9772 and set up an appointment to review your portfolio and discuss your retirement goals.

Securities America and its representatives do not provide tax advice; therefore, it is important to coordinate with your tax advisor regarding your specific situation.

*“Get Ready to Kiss a Majority of Your Social Security Benefits Goodbye,”…

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