When You’re 65: Things to Consider When You’re Heading into Your Retirement Gregory J. Sorce

08/30/2019 — Download

Most people who make it to 65 wonder how they got there so quickly. John Lennon said, “life is what happens when your busy making other plans.” If you did most of the right things regarding investing for the long run during your working life, you should be comfortable in retirement. If you are reading this you probably have done the right things to prepare you and your family for a long retirement. After all, in 2019 we are living well into our 80s and 90s and beyond.

A few things to keep in mind at this stage.

First, if you plan to work after age 65 and are covered under your companies health plan, you still have to apply for Medicare. If you don’t apply at 65 you will be forever penalized for the cost of Part B. Part B is the coverage for seeing your doctor. The penalty is 10 percent for each 12 month period after your 65th birthday! You won’t have to pay the Part B premium but you have to apply.

Pay down as much debt as possible before you retire. Zero debt is the best way to enter retirement, or at least debt payments that are easy for the amount of cash flow you will be receiving. Don’t worry about mortgage interest that may be three percent or four percent. If you can deduct the interest, the net cost may be two percent or three percent, and hopefully, you have a diversified portfolio that is averaging over the long term at five percent or six percent on an annual basis.

Receiving the most from Social Security during your life can be a tricky calculation. Usually it is best to wait for your full retirement age (66 plus). If you are healthy, each year you wait you get an 8 percent increase in payments for life. So if you plan on living into your 80s, you may want to wait to reach age 66 or even 70 if you have enough money to live comfortable until that age. Probably best to meet with your CFP® when making this decision.

Lastly, I like to tell clients who are 70 years of age and have accumulated a healthy net worth that, if you live 20 more years, the next 10 may be your best, so don’t put off that European river cruise!