For most Americans, turning 65 is one of the most significant transitions in life. You've earned the right to spend more quality time with your children, grandchildren, and friends, pursue your hobbies, travel, read, devote more time to your favorite charities, and knock off several items on your bucket list.
The key to getting the most from your golden years is a solid plan to help ensure no unpleasant surprises face you when you make the transition. Here are some things you need to think about.
Securing a quality health plan is at the top of the list. You must make sure you understand deductibles, copayments, employer coverages for retirees, and other costs as part of your overall retirement plan.
In most cases, eligibility for health insurance under Medicare begins when you turn 65. You also may be eligible for Medicare benefits at any age if you're diagnosed with a qualifying disability such as end-stage renal disease or ALS.
If you already receive Social Security benefits, you'll get information about Medicare enrollment three months before your 65th birthday, and you will automatically be enrolled in both Part A and Part B.
When you become eligible for the first time, there is an initial enrollment period of seven months to enroll. This timeframe includes three months before the month you turn 65, your birthday month, and ends three months after the month you turn 65. Otherwise, Medicare will contact you about six months before you turn 65 so that you can start the process of making decisions about what kind of Medicare coverage you want.
If you miss this initial deadline, your Medicare coverage will be delayed, and you'll have to wait until the next general enrollment period or a special enrollment period. As a result, your Medicare coverage won't be effective until the following July. When you finally do enroll, you may also have to pay a higher monthly premium as a penalty for late enrollment.
You have several options to choose from which may include:
Make sure to do your homework and reach out for help if you have questions.
To enroll in Medicare, contact the Social Security Administration (SSA) online, by phone at 800-772-1213, or in person at your local Social Security office.
If you work with an employer that provides retired medical benefits, meet with a human resources or benefits person to help you understand your options.
The critical thing to remember about health insurance is that you do not want any gaps in coverage. If you retire before 65 and your employer does not offer retiree health insurance, you may need to look at COBRA coverage or buying a plan through your state's health insurance exchange.
Also, now's a good time to think about long-term disability care insurance as well.
You can draw Social Security benefits as soon as you turn age 62. However, the earlier you decide to take Social Security benefits, the less you'll receive for the balance of your life.
When you turn 65, you have not maxed out on the amount you can draw. You don't reach your full retirement age until you turn 67.
Social Security provides an online calculator at ssa.gov to help you determine the benefits you'll receive at various ages, as well as an accounting of the wages you've earned over your lifetime that are used as the basis for your benefits.
As you approach 65, creating a post-retirement budget is a great way to start. It should consider all your retirement benefits and assets, ongoing sources of income such as pensions, IRAs, Social Security, and other investments, and your anticipated living expenses. You may need to consider downsizing your lifestyle depending on your situation.
In addition to health coverage offered by your employer, get information about your pension, and vacation and sick time payouts, and any bonuses that may be due to you.
Ideally, you should start this planning three to five years before your anticipated retirement. Consider working with a financial planner to help you best allocate your investments to match your retirement goals.
Deciding where you're going to live when you turn 65 is another big decision.
If you have considered moving after retirement, start the decluttering and downsizing process well in advance. Moving when you're older is a challenge, and anything you can do to simplify that process is wise.
Start researching the markets where you could potentially end up and, if possible, plan visits at different times of the year so that you have a complete understanding of weather, lifestyle, and other important factors that will impact your new life.
If you're going to stay in your existing home, it's still a good idea to go through the downsizing process, although you can save that as a retirement activity. If you’re considering any expensive repairs or remodeling, it’s best to do them before you retire when you have more income.
In some cases, you may be entitled to a property tax break when you turn 65. Deductions and discounts vary by state and municipality, but it's worth checking in with your local tax assessor to see if you qualify.
Turning 65 is an excellent time to review your will, living trust, and other legal documents related to your estate and finances.
Be sure your personal and medical files are organized and easy to access on short notice. Also, be sure your beneficiaries are up-to-date and that you have chosen a suitable Power of Attorney. Preparing advance directives makes it clear what your end-of-life wishes are as well.
If you pass away or become incapacitated, you could create months and months of delays and legal chaos for your family that could be easily avoided with a little planning.
Be sure to maintain your friendships and try to develop new friendships based on common interests. Whether it is golf or reading, there are many options to get involved with groups that enjoy the same things.
If you haven't kept up with old friends as much as you would have liked, now is the time to rekindle those relationships. Often, your friends and family members will be turning 65 right around the same time as you. That means they'll also be looking for ways to transition to meaningful activities as well.
College alumni groups, retired employee associations, senior travel clubs, hobby enthusiasts, and several other similar group gatherings offer outstanding opportunities to remain connected.
Also, don't overlook the fact that you can rekindle your relationship with your spouse with more time now. Plan dinner date nights, movie outings, weekend getaways, and other things you've liked to do as a couple over the years.