Retirement Over a Decade Away? Time for Important Decisions

Nov 7, 2019 Willow Creek Wealth Management Posted in Articles

Many of us see reaching our 60s as a long-awaited milestone. But even if a retirement date is on the back burner, this is a critical time for two important financial considerations — when to take Social Security benefits and a timely sign-up for Medicare.

Social Security

While there is no hard and fast rule as to when to sign up for benefits, it pays to understand your options so that you can maximize your retirement income.

The basics: You can begin collecting monthly benefits as early as age 62 and as late as 70. Benefits are based on the amount you earned while working, averaged over the top 35 years. If you take early benefits, your payments will be reduced as much as 25% for the rest of your life.

Between the ages of 66-67, you will receive your full retirement age benefit (FRA). You will also no longer be penalized for having earned income.

If you can wait until the maximum age 70, however, you will get as much as a 32% increase in benefits.

Timing: 2019 is the last year that those reaching their Social Security full retirement age can take restricted spousal benefits while waiting for benefits on their own record to grow. So, while some of the best claiming strategies for couples are gone, there are advantages to considering a “split strategy” where couples file for benefits at different ages – depending on life expectancy assumptions and which spouse is the larger wage earner. Due to the complexity of the rules and broader financial implications, it can be too much to ask that Social Security staff give personalized advice. You may want to consider consulting a financial planner that specializes in retirement planning.

Signing up: The best way to sign up is online. Due to budget cuts, the wait times on the 800 numbers and at local offices have become problematic. You can simply set up an online account at, click on “Apply Online for Retirement Benefits,” review the information you will need and complete the application.


Mistakes can be costly when it comes to signing up for Medicare, so make sure you read up on the rules or seek help from HICAP, the Health Insurance Counseling & Advocacy Program online at

The basics: There are two basic options to choose from — “original” Medicare or Medicare Advantage.

Original Medicare is offered by the government and includes Part A (hospital) and Part B (providers). You should add to this coverage by purchasing Medigap (supplemental coverage) and a Part D (prescription drug) policy.

Medicare Advantage plans are offered by private insurance companies. These plans have the same coverage as Part A and B, generally, include prescription drugs and include some Medigap-like protection against catastrophic out-of-pocket expenses. The care options between the two can be very different, so you should research them carefully. Be aware neither includes dental, vision, hearing aids, or long-term healthcare expenses such as assisted living or nursing home care.


Many people think that signing up for Medicare is the same as Social Security and wait too long. In reality, the ability to claim Social Security benefits is flexible and ranges from age 62-70.

On the other hand, most people only have until age 65 and four months to sign up for Medicare without a lifetime premium penalty. There is an exception if healthcare is covered by an employer.

If the employer coverage meets certain criteria, they would not need to sign up until they lose coverage or stop working. Medicare rules are complicated, however, so it pays to work with a private healthcare consultant or make an appointment with a volunteer associated with the HICAP program mentioned earlier.

Signing Up

The best way to sign up for Medicare is online. You can conveniently access the online application on the Social Security website since Medicare is a related benefit. The premium for Medicare Part B is automatically deducted from your monthly Social Security if you are receiving benefits. If not, there are several other payment options.

The biggest mistake seniors make with both Social Security and Medicare is not doing some personalized planning in a timely manner. In this case, one size does not fit all. So along with your 60th birthday celebration, be sure to add in some benefits homework so you make the most out of these important government programs.