Whether you’ve already retired or are planning on retiring soon, turning 65 is a milestone to be celebrated. At this age, you can cash in on senior discounts, apply for Medicare, and claim Social Security. Regardless of when you want to say goodbye to your working years, there are some steps to take and decisions that need to be made when you turn 65.
Get Familiar With Medicare
Medicare eligibility begins at age 65. If you aren’t already receiving Social Security, you will need to manually apply for benefits. You can sign up as early as three months before your 65th birthday so that your coverage begins as soon as possible. You have plenty of choices for your Medicare plan, such as original Medicare covering, prescription drug plans, and supplemental insurance. Your premium costs will depend on your coverage choice and your income. Medicare can be complicated and overwhelming, so start researching now to make informed choices.
Make A Social Security Plan
If you have yet to tap into Social Security, be mindful of the fact that 65 is not quite full retirement age (FRA). If you were born between 1943 and 1954, your FRA is 66. Starting in 1955, two months a year is added again until the FRA becomes 67 for those born in 1960 or later. If you want to maximize your Social Security benefit, you’ll need to wait a bit longer before claiming Social Security. Regardless, turning 65 is a good time to get the details in place and paperwork ready to start collecting your benefits. If you are still working or don’t need the money to cover living expenses, you can delay receiving your benefits until age 70.
Keep in mind that the income you earn in the year before FRA and the year you reach FRA will impact your benefit amount. Any income you earn before the year in which you reach FRA reduces your Social Security benefit once it surpasses a specific limit. For 2018, the limit is $17,040. Once your earnings exceed that, your Social Security benefit will be reduced by $1 for every $2 you earn. The income restrictions change the year you reach FRA. That year there is a higher limit, which is $45,360 for 2018. Your Social Security benefit will be reduced by $1 for every $3 you earn once you pass that limit.
Creating a Social Security strategy will help you determine the best time to claim benefits and guide you in making decisions about how much to work in the years leading up to your full retirement age.
Consider Long-Term Care Insurance
An average 63% of today’s 65-year-olds will require some form of long-term care during their lifetimes. (1) On average nationally, it costs $253 per day or $7,698 per month for a private room in a nursing home. (2) But the older you get, the higher your cost for a long-term care insurance policy will be and the greater the likelihood of your application being denied. Generally, the last age long-term care insurance is affordable is when you are in your mid-60s.
Cover Your Legal Bases
Although age 65 is far from the end of your life, as you get older and your health risks increase, it would be wise to use this milestone to get your affairs in order so your family is taken care of. Consider drafting a will, finding a power of attorney for your finances and health, and creating an advanced medical directive in case you cannot make decisions on your own.
Maximize Your Catch-Up Contributions
If you are still working, these next few years are your last chance to really build up your nest egg for retirement. For 2018, you can contribute an extra $1,000 to an IRA and an additional $6,000 to a 401(k).
Create A Savings Withdrawal Plan
When you do start living off of your hard-earned savings, you need a plan in place to ensure your money lasts you through your retirement. You don’t have to start taking required minimum distributions (RMDs) from your IRA or 401(k) until you are 70½, but you may want to withdraw some money now so lessen the tax impact later. The key is to sit down and map out multiple scenarios to minimize your tax bill, make your money last as long as possible, and enjoy your future retirement with less worry.
If you’re feeling overwhelmed at planning for retirement or figuring out how to manage your finances at this stage in your life, it’s useful to work with a professional who has worked with those in a similar situation as yours. Feel free to contact me today to learn about the specifics of the types of decisions you need to make when you turn 65. Download your free retirement readiness kit and email me at email@example.com or call (304) 626-3900.
John is the founder and owner of Beacon Wealth Management. He specializes in helping entrepreneurs, professional practitioners and retiree redzoners overcome the major financial challenges facing affluent families.
As a trusted and friendly financial partner, John delivers a collaborative client experience that empowers and guides people to reach a greater purpose for their wealth and pursue their financial dreams. He understands the multifaceted set of financial worries people face as they become more successful and get within the retirement redzone.
John is well-regarded throughout the business community for his expertise. He has appeared as an expert guest on the “Brian Tracy Show” and “Hollywood live with Jack Canfield”, is the co-author of the book, Masters of Success with Brian Tracy, is the host of the WDTV News 5 segment, “Solutions 4 Financial Independence,” and has conducted hundreds of educational events on Retirement and Investment Advisory, Tax Reduction and Wealth Transfer Planning. These include many Universities, Federal Employee Organizations, Professional Associations and Large Energy Companies throughout the eastern United States.
With more than two decades of experience, John is credentialed as a Certified Wealth Strategist (CWS), Accredited Investment Fiduciary (AIF), Certified Estate Planner (CEP), Chartered Federal Employee Benefits Consultant (ChFEBC), Professional Plan Consultant (PPC) and Registered Financial Consultant (RFC). He is also a past multi-year member of Ed Slott’s Master Elite IRA Study Group.
A native of Weston, West Virginia, John served in the United States Air Force prior to becoming a Wealth Advisor. Today, he resides with his family in Clarksburg, West Virginia. He and his wife, Lisa, have been married since 2005 and have three amazing children. A family-oriented man, he is passionate about giving back to his community, coaching youth sports, landscaping, architectural design and playing racquetball.