Age 65 is not as special as it used to be. Mandatory retirement has long since vanished for most jobs. Social Security's Full Retirement Age is gradually rising to 67. Many 65-year-olds pursue active lifestyles that would have seemed fantastic in an earlier era.
Still, 65 does matter. It is the age when most people become eligible for Medicare. Some of the expenses faced by younger adults have eased or disappeared. But chronic health issues may be emerging. It is a good time to take stock of your financial circumstances and consider if any tweaks are in order for the next stage of your life.
Here are some important steps to take when you reach the symbolic milestone of 65:
1. Find out whether you need to sign up for Medicare.
Medicare has complex rules, and you should do homework to find out how they apply specifically to your enrollment needs and options, including whether it makes sense to enter the program at 65. If you are already getting Social Security, the agency will automatically sign you up for Medicare Part A (which covers inpatient hospital stays, and some other services) and Part B (which covers doctor's visits, outpatient care and some other services). Otherwise, if you want Medicare, you must sign up on your own (the sign-up window is three months before the month you turn 65 to three months after that.) Be aware that if you are beyond 65 and getting health insurance from your own or your spouse's employer, you can probably delay Medicare enrollment until that employment ends, without risking late penalties. If you're not sure when to enroll, call Social Security at 1-800-772-1213. You should also decide whether to enroll in traditional Medicare or a privately run Medicare Advantage plan. To learn more, spend some time on the website http://www.medicare.gov/people-like-me/new-to-medicare/getting-started-with-medicare.html or pick up the new book Medicare for Dummies, by Patricia Barry of AARP.
2. Review your Medicare Part D options for prescription drug coverage.
If you are enrolling in traditional Medicare, you will need to choose a prescription drug plan. (Medicare Advantage plans usually include this coverage.) One place to compare plans is https://www.medicare.gov/find-a-plan/questions/home.aspx. Be aware that plans differ in terms of which medications are covered, how they are covered, and how much you will have to pay for them. Also, premiums change annually. I review costs every year for my father-in-law and saved him over $400 this year just by switching plans.
3. Meet with a financial planner to ensure you are using your nest egg wisely to meet future income needs.
Use calculators to estimate Social Security (if not yet claimed) and retirement income. (You can find user-friendly online tools at aarp.org and socialsecurity.gov.) Consider whether you should invest in an annuity or similar product, which can provide lifetime income starting now or at a future date.
4. Check if your retirement savings are well diversified.
With the stock market increasing so much this year (more than 25 percent as of this writing), you may be overexposed to equities. Just how much risk you want in your portfolio is, of course, your own call. Just remember that diversifying investments increases the safety of your nest egg. The older you get, the less time you have to wait around for assets to recover if there is a plunge in the market.
5. Make sure your will is up to date and your family knows your wishes.
It may seem obvious that estate planning becomes more important as the years pass. But lots of people fail to pay attention, and their survivors inherit a mess. In addition, you may also want to consider advance planning for your own health care preferences if you have not done so. Talk to loved ones about your wishes. If you create an advance directive, make sure it is clear (but not completely inflexible) and designate a trusted, highly competent proxy to represent you in medical decisions that may be complex and hard to anticipate.
6. If you are still working, make it a priority to save part of your paycheck.
At age 65, women and men have a life expectancy of almost 20 more years (women on average last longer than men). For a married couple age 65, the odds are as high as 50 percent that one of them will make it to 90. More years are a blessing, but they sure push up the cost of retirement. Also, the longer you live, the greater the odds that your nest egg will run out due to health care and other expenses. Social Security benefits are modest, and they are gradually replacing a smaller percentage of pre-retirement income. So for many people, saving more makes huge sense. If you still have a steady paycheck, take opportunities to build your nest egg.
7. If you are not working, consider getting a part-time job or volunteering.
A part-time job does more than give you a few bucks. It gets you out of the house and provides a chance to learn some new things and meet new people. Giving back through unpaid service can accomplish this same end, with the added bonus of knowing you are doing something good for the world. Staying actively engaged in the life outside your front door is vital for the well-being of your body and mind. Isolation can be deadly. Remember, good health is the greatest asset of all.
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