CHAPTER 51 Social Security and Medicare
Sarah D. Asebedo, MS, CFP®
Virginia Tech
Martin C. Seay, PhD, CFP®
Kansas State University
Thomas Warschauer, PhD, CFP®
San Diego State University
CONNECTIONS DIAGRAM
Social Security and Medicare interact with many areas of financial planning. Social Security Survivors benefits are an integral part of most life insurance needs analysis and Social Security disability payments are critical in evaluating clients’ disability insurance needs. For clients over age 65, Medicare is an integral part of health insurance planning. Because Social Security payments are fixed, forecastable, and generally dependable, they must be considered in determining investment strategy. Various Social Security payments interact with other taxable income in a way that ties these areas closely together. Lastly, Social Security retirement payments are an integral part of retirement income planning.
INTRODUCTION
Social Security provides an important source, and possibly the only source, of inflation-adjusted (real-dollar) retirement income for most retired Americans. It also is an important source of income for the families of deceased workers through survivors benefits. And finally, it provides an income for disabled workers and their families. The income tax treatment of Social Security benefits varies because taxability of benefits is based on the amount of other ...
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