Despite the apparent good news that Social Security recipients are scheduled for a 1.7 percent cost of living adjustment next year, critics are already suggesting the boost will be immediately offset by a Medicare Part B premium increase.
It's a one-step-forward, two-steps-back scenario that critics say paints a picture of what the future of retirement will be like for many Americans, as those gradually increasing health care costs continue to eat away at their limited retirement resources.
"This reflects the growing trend of health-related expenses eating into retirement income," said IRI president and CEO Cathy Weatherford, in a release. "The cost of health care is a real risk that can jeopardize one's retirement security. Consumers need to develop a plan with a financial advisor that includes a strategy to cover basic living expenses as well as medical expenditures."
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On Tuesday, the Social Security Administration announced a 1.7 percent increase in benefits in 2013, but the IRI suggests most Social Security recipients will not actually receive bigger checks as the increase will mostly be eaten up by Medicare Part B premiums, which are estimated to increase in the near future.
The 2012 Medicare Trustees' Report, for instance, suggested a projected increase of 9 percent.
Many Medicare beneficiaries are protected by the "hold-harmless" provision, which prevents a Social Security benefit check from decreasing, although that provision does not apply to higher-income individuals and new Social Security enrollees, who will likely see those Medicare premiums consume more of their Social Security benefits.
IRI's research suggests 42 percent of boomers see Social Security as their major source of retirement income, though only 37 percent say they believe those benefits and other retirement savings will be enough to pay for medical expenses during retirement.
Other studies have shown that the cumulative, post-retirement health care expenses, including insurance and Medicare premiums, will average $369,000 for a healthy 65-year-old male and $417,000 for a healthy 65-year-old female.
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