Social Security Cola Announced
Every October, the Social Security Administration announces the COLA or cost of living adjustment for the coming year. The 2020 COLA is 1.6% which is below the original estimate announced earlier this year. This information and much more can be found at https://ssa.gov/cola.
A 1.60% increase sounds pretty low but is it?
The average COLA over the last 10 years is only 1.36%. Since the year 2000, the highest COLA was 5.8% in 2008. The lowest was 0.00% in 2009, 2010 & 2015.
On the other hand, Medicare part B has moved from $93.50 to $135.50 over the last 10 years for those with income under $85,000. Income between $85,000 and $120,000 has experience an increase from $142.90 to $433,30 a month according the Congressional Research Service April 4, 2019 report on Medicare part B premiums.
Why is this information important? Every retirement plan will include an assumption for your social security income. An inaccurate social security estimate will have a ripple effect within your plan. If you use too high an estimate, the plan could give you a false sense of security. Use too low an estimate, you may think you need a much more aggressive investment strategy then is necessary. This could expose your investments to the next market crash putting your financial security in real danger.
It is critical that your Financial Advisor carefully monitor trends in Social Security Benefits, Medicare costs and much more. This is one of many reasons why your retiremet plan should be updated every year.
Is investment performance important when planning for retirement. Absolutely! But there is much more to consider. If your Advisor or Broker does not update your retirement plan every year, it may be time to find another Advisor.
At TFG Wealth Management our clients know that we are reviewing and updating their retirement plans every year. Our goal is to meet or speak with every client at least once a year if not more.
If your retirement plan has not been updated recently, it might be time for a second opinion. Give us a call at 866-296-8156 and ask for a complimentary second opinion.
My best,
Mark
