The EMS World Retirement Guide: Wealth and Health

First in a series.

Retirement. I thought I’d never get here. I always found reasons to keep working.

For years, it was ego. Being a paramedic was a big part of my self-esteem. I knew I wouldn’t feel as good about myself if the only license in my pocket came from the DMV.

Money was a factor, too. At times, my wife and I each made less than some states’ minimum wages, but even a part-time medic job in the chronically underpaid Southeast helped balance our budget. Helen and I postponed discretionary purchases for decades while our dogs and cats got whatever they wanted.

Then last summer, after 30 years in EMS, I started thinking of myself as retired. It was more of a technicality than a pivotal decision: I was halfway from 69 to 70 and hadn’t seen a patient since “stop the steal” triggered pitchers and catchers only. Injuries and age-related obstacles kept me from seeking one last 9-1-1 position in some prosperous, paramedic-starved beachfront community. It was time to accept my sedentary state and call it a career.

I would have been better prepared to exit EMS if I’d learned more about occupational off-ramps as a young man, but I felt invincible, as so many of my colleagues did. Who thinks of retirement when time and opportunities seem unlimited?

What about you? Do you ever wonder how you’ll finance your senior years? Are adjustments to lifestyle on your radar, or are you just going to wing it while watching other folks go to work? You don’t have to be my age to worry about staying healthy and solvent after EMS.

Maybe I can help you get started. One caveat: The government programs and regulations we’re going to discuss have many variables, most of which won’t fit in this limited space. My generic advice is no substitute for one-on-one, expert counsel.

Social Security

A few years after I’d signed up for an online Social Security account, I got a letter from the local office confirming receipt of my electronic application for retirement benefits. The problem? I hadn’t requested any benefits. Someone pretending to be me had.

I’ll spare you the details about restoring my stolen identity; it’s a topic for another time. I mention it to warn you that web-based retirement tools, like anything on the Internet, can be hacked. Use secure connections and protect your confidential information with multi-factor authentication instead of a single password, whenever possible. Then get in the habit of watching your accounts for suspicious activity.

A bigger problem for me was my passive approach to retirement. I thought Social Security benefits were pretty much automatic and required no more concern than, say, an Ipecac shortage. I was wrong. You could be, too, if you’re on the high side of 40 and chasing idyllic “golden years.” Whatever leisure time you’ve earned won’t last if you can’t afford it.

Start with these questions:

When should I apply for Social Security?

Most of you are entitled to retirement benefits anytime after turning 62. Exactly when to start that monthly stipend is one of the most important decisions you’ll make, because the amount increases by about 8% each year you wait, until age 70. That’s so important, let me put it another way: The sooner you take benefits, the less you’ll get per year, forever. That works against the common practice of tapping Social Security funds as early as possible. If you can afford to delay, you should. The stakes are high, as you’ll see in this example from Get What’s Yours by Kotlikoff, Moeller, and Solman, my go-to source for retirement advice:

Say you were born between 1943 and 1954, as I was. That would make 66 your full retirement age (FRA), a government reference point based on birthdays that helps determine how much you’re owed and when you can take it. (The FRA for those born one year later, 1955, would be 66 years and two months.)

If your monthly benefit at FRA were $1,000, you’d get only $750 (25% less) at 62, the minimum age. But for every year you waited beyond FRA, your payments would increase by 8%. Try finding a safe investment with that kind of return. At 70, you’d max out with $1,320 per month. That’s 76% more than what you’d get at age 62.

You’re probably thinking, But Mike, if I started at $750 a month when I turned 62, by the time I’m 70, I’d be ahead by…let’s see…$72,000. That’s true, but you’d break even at 79 (not including interest) by waiting to collect. Every year you lived beyond that, you’d gain $6,840 (12 months of $570 each). That buys a lot of beef jerky.

Maybe you’re pessimistic about how long you’ll live. Many of your high-mileage coworkers feel the same. Taking more money now and less later might sound like a good trade, but what if you stay freakishly healthy and outlive your savings? To paraphrase Scarlett O’Hara, where would you go? To a county nursing home? Most of us in EMS know they’re horrible places. I’d rather maximize my benefits long-term so I don’t end up warehoused with other octogenarians 10 years from now.

Think of Social Security as old-age insurance: the more you have, the longer it can help you live with dignity.

How can I apply?

Despite my unpleasant experience with identity theft, I still believe the easiest and safest way to apply for Social Security is online (ssa.gov). The computer-driven process feels supportive and not too scary. It shouldn’t take more than 30 minutes; plus, you won’t have to worry about some fallible human intermediary misleading or misunderstanding you.

You’ll begin by opening a free online account that you should monitor monthly even after you start collecting benefits. The Social Security Administration (SSA) just finished upgrading the quality and quantity of information you’ll see.

Applying in person at your local SSA office is the second-best option, in my opinion. You’ll deal with an agent who may not know much more than you do about your retirement benefits, but at least you can participate in the process by reviewing results and making adjustments.

If you apply by phone—the third-best choice—you’ll have to navigate a convoluted audible menu and could wait as long as an hour to speak with someone who didn’t necessarily graduate near the top of their SSA orientation class. I got bad advice from several customer-service reps who were nice people but poor resources.

Check the ssa.gov website for documents you’ll need regardless of how you apply. Contact your local office if you can’t find answers to your questions online. Take notes, trust no one, and follow up.

How much money will I get?

I mentioned that benefits grow if you wait for them. Initially, they depend on how much and how long you’ve contributed to Social Security during all those years of salary-sapping payroll deductions. You can read the formulas in Get What’s Yours, but you may find that tedious exercise incompatible with healthy living. A better use of time would be to download your earnings statement via your online account and make sure it’s correct.

If your husband or wife—even one you’re no longer married to—has earned much more than you, consider requesting spousal benefits. If you qualify, you’ll receive up to half of their FRA amount, assuming they’ve already applied for Social Security.

Spousal benefits replace your own…well, sort of. You’ll earn what’s yours plus an extra amount, the sum of which maxes out at half the spouse’s FRA entitlement. So no, you won’t get both, not really. Pick the one that’s higher. Then go work on something more soothing, like your tax return.

When and how will I get what I’m owed?

Retirement benefits are transferred digitally each month into an account you choose, on the Wednesday designated for your birthday. (Paper checks aren’t an option.) A quirk of the system is that you’re always paid the prior month’s benefit—e.g., April’s direct deposit is what you’re owed for March. I suspect Uncle Sam earns mucho buckos on that float, but lets focus on an overwhelming positive: After decades of payroll deductions for taxes, insurance, and other fees, you’re going to love waking up on your own special Wednesday once a month with a bigger bank balance than you had the day before. And you didn’t have to answer any GI bleeds to earn it. Helen calls it magic money.

Are my benefits taxed?

That depends on what you earn overall. Provisional income, calculated while preparing your return, determines how much Social Security is exempt from federal taxes. Many of you will be able to shield at least 50% of your benefits.

What could go wrong?

Plenty. You could apply too early or too late and lose some benefits. You could request or receive the wrong benefits. You could miss a crucial letter or phone call from the SSA about your application, fail to respond, then have your application terminated (that happened to me). You could get inaccurate advice from the SSA. You could overlook the taxable portion of your Social Security and end up with a big IRS bill. You could be the unlucky victim of fraud—or even a misunderstanding—that costs you time and money.

The antidote to all of the above is preparation, documentation, and follow-up.

The next installment of this series will cover Medicare.

Retired paramedic Mike Rubin is the author of Life Support, a collection of EMS-oriented essays, and a member of the EMS World Editorial Advisory Board. Contact Mike at mgr22@prodigy.net.