Sally Pipes Medicare isn’t free; seniors need to prepare for that

About 10,000 Americans turn 65 each day. Many may soon leave the workforce and claim the Medicare benefits they believe they’re entitled to after paying Medicare taxes for decades in the workforce.

But they may be in for a rude awakening. Even after paying tens or hundreds of thousands of dollars in Medicare taxes over their working careers, beneficiaries spend thousands of dollars more each year for coverage during retirement.

That coverage doesn’t always guarantee them timely access to the doctors or specialists they might like to see. It’s no wonder seniors are increasingly opting for privately administered Medicare Advantage plans, which often offer more value than the conventional government-administered Medicare program.

People start paying for Medicare long before they’re elderly. To fund certain parts of the program, the government levies a 2.9% payroll tax.

That money adds up. According to the Urban Institute, an individual currently in his mid-twenties earning less than $23,400 annually will pay $60,000 in Medicare taxes by the time he turns 65. If that same individual made $83,000 each year over his lifetime, he ‘d pay $220,000 in total Medicare taxes.

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