If you are currently receiving Social Security payments by paper check, get ready for a change. Beginning March 1, 2013, most recipients of Social Security benefits will have to decide to receive payments via direct deposit or a Direct Express prepaid debit card. 5 million of the approximately 63.5 million people who receive Social Security are still receiving their payments. A few exceptions will be made for unique circumstances or for people in their 90s, but all others will have to make the change. To choose the direct deposit option, go to GoDirect.org or call 800-333-1795.
On a somewhat related matter, do you think you have saved enough for health care? Take a guess what the amount for one individual is if he/she went into retirement this year at age 65? $120,000 over the course of one’s lifetime. Why so high, you may ask. Well, even with Medicare, there are many expenses which are not covered–deductibles, co-payments, and low-tech aids such as hearing aids and glasses. For example, Medicare Part A covers inpatient hospital stays, but the annual deductible is $1,184. Part B covers doctors’ visits, but the annual deductible here is $147 and a monthly charge of $104.90 x 12 = $1,258.80 ($1,405.80 total). Part D covers drug costs, but in 1 year, the individual must cover $480. The total cost, then, in 1 year for the expenses not covered by Medicare, Parts A, B, and D = $3,069.80. You get the idea. So medical coverage in retirement can get pricey. One solution may be to buy medigap insurance, if you’ve already retired. The average total premium for 1 year = $2,120, so you would be ahead by over $1,000. Or if you have a Medicare Advantage private health insurance plan such as an HMO or PPO, the Affordable Care Act will soon offer some relief. It will limit out-of-pocket expenses in 1 year to $6,700. That may not seem like much help, but if a hospital stay is involved, that amount will look very good indeed. In any case, be prepared to spend on health care in retirement. It’s not a free ride just because you’re now covered by Medicare..