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6 Steps Seniors Should Consider Before Retiring

Guest post from Alice Stevens at BestCompany.com

Those golden years have arrived. If you’re lucky, retirement is just around the corner. Before you retire, you need to make the following important considerations:

  • Setting a retirement date
  • Making withdrawals from retirement accounts
  • Receiving Social Security benefits
  • Enrolling in Medicare
  • Writing a will
  • Paying for your final expenses
Retired Couple
Retired couple dancing on the beach

Setting a Retirement Date

While you may have been eager for your retirement to start as soon as you began working, you need to consider your financial situation before you retire.

Take a look at your savings account and your retirement accounts. Think about how much your Social Security benefits will be. If you have a health savings account, also consider those numbers. 

Determine your living expenses, health expenses, and the costs of your other retirement dreams. 

Go over your available funds and expenses with a financial adviser to estimate how much you need to take care of yourself during retirement and compare those numbers with what you have in your retirement accounts and what you can receive from Social Security.

Making Withdrawals From Retirement Accounts

When you start planning withdrawals from your retirement accounts, you need to understand how taxes work on them and what the age requirements are.

Some retirement accounts, like 401(k)s, are tax-deferred accounts, which means that you’ll owe taxes on what you withdraw.

Other retirement accounts, like Roth IRAs, are made of taxed income. Since these funds were already taxed before growing in the account, they are not taxed when you make withdrawals.

Understanding how taxes work for your retirement accounts will help you plan your withdrawals and anticipate your taxes each year.

You can start making withdrawals without penalties from your retirement accounts at age 59 and a half. 

Everyone is required to take a required minimum distribution by April 1 a year after reaching age 70 and a half. The required minimum distribution is determined based on life expectancy and the amounts in your retirement accounts.

Meet with a financial planner or advisor to review the specifics of your situation and discuss the best option for planning your withdrawals. In some cases, making some withdrawals before the first required minimum distribution may help with tax-planning.

Financial Advisor
Financial advisor shaking hands with senior woman in living room

Receiving Social Security Benefits

You should also discuss Social Security retirement benefits with a financial advisor. You can start receiving benefits as early as age 62, but the benefit amount may be lower than it could be because you’re receiving the benefit early. 

If you wait until the full retirement age based on the Social Security Administration’s Retirement Age Chart, the benefit amount is not reduced.

Additionally, if you’re still working when you begin collecting, your benefit may be reduced if you make over a certain amount.

Deciding when to start receiving Social Security retirement benefits depends on your situation, including how long you want to work, your financials, and your health. Whenever you decide to start receiving Social Security benefits, be sure to apply four months in advance of that date.

Additional government programs, like Supplemental Security Insurance, can also help you with living expenses.

Enrolling in Medicare

While there are some exceptions that allow you to become eligible for Medicare earlier, you become eligible for Medicare when you turn 65 years old. Your initial enrollment period (IEP) starts three months before your 65th birthday and ends three months after your 65th birthday. If you retire from the railroad, you may automatically be enrolled.

During this first enrollment period, you do not have to worry about passing an underwriting process or being charged more or denied for pre-existing conditions. Take advantage of this time to research your options and make an informed choice.

You can choose to enroll in Parts A and B (Original Medicare) only, or add on either Part C (Medicare Advantage Plan) or D. Original Medicare is run by the government and includes Medicare Part A, hospital insurance, and Medicare Part B, medical insurance. You can visit any doctor in the country who accepts Medicare. Enrollment is managed by Social Security.

If you enroll in Medicare Advantage, you’ll still have A and B, but you may be able to get additional benefits. These plans are managed by private health insurers and are similar to other private health plans. For example, these plans have networks of health care providers. Some also offer dental, hearing, vision, and prescription drug coverage.

As you decide the direction you want to take when you enroll in Medicare, consider Medicare Part D (prescription drug coverage) and Medigap. You cannot have Medicare Advantage, Part D, and Medigap at the same time. You’ll have to choose between Medicare Advantage only, Medigap only, Part D only, or Medigap and Part D.

Part D plans only provide prescription drug coverage. Medigap (or Medicare Supplement) plans help with out-of-pocket expenses (like copayments) from Original Medicare. 

Turning 65 Checklist
Turning 65 Checklist

Writing a Will

If you haven’t written a will yet, now’s a good time to do it. Include your wishes regarding medical treatment if you are on life support or in a coma. The will should also identify someone who will make medical and financial decisions on your behalf if you become unable to make them for yourself.

The rest of your will should set forth how you want your assets distributed. If you do not put your wishes into writing, your assets will be distributed according to state and federal laws.

While it can be intimidating to create a will, it’s important because it will lift decision-making burdens from your children and caretakers. You can use online resources to create your will yourself or go over it with an attorney. Reviewing it with an attorney can help you think through potential scenarios and plan for them.

Paying for Your Final Expenses

You also need to consider how your funeral and final costs will be paid. Funerals are expensive. The National Funeral Directors Association (NDFA) found that the median funeral costs with a viewing were $6,260 for cremation and $8,755 for burial in 2017.

If you have enough savings to pay for it yourself, you need to realize that probate will delay your beneficiaries’ access to those funds. Probate is the legal process for reviewing a will or applicable laws and disbursing everything out accordingly. 

You do not want to put family and friends in a financial bind when planning your funeral.

You have two main options for funding your funeral

  1. You can pre-pay for your funeral
  2. You can buy a final expense or burial insurance policy.

If you know where you want to be buried and which funeral home you want to use, then it may be worth pre-paying for your funeral. Choose the funeral home wisely because if you prepay and the funeral home closes, you might be out of luck. You’ll also want to be sure that it’s a reputable funeral home.

Final Expenses and Arrangements Guide
Final Expenses and Arrangements Guide

Alternatively, you can buy a final expense or burial insurance policy. These policies are designed for seniors and are a kind of permanent life insurance policy. These permanent policies have lower coverage levels because they are meant to cover final expenses and funeral costs.

Once you have all these details taken care of, you’ll be able to stop worrying about problems you may encounter and how you’ll leave your loved ones. You’ll be able to maximize your time enjoying your golden years and cherish moments with family and friends.

Retirement and Medicare Eligibility

What happens to your health insurance when you retire? Medicare and retirement can seem intimidating, but we’re here to ease some of your concerns and answer your questions.

There are currently an estimated 70 billion baby boomers who are nearing retirement. Planning for retirement is crucial to living a comfortable and healthy life. An annual estimate by Fidelity shows the average couple retiring at age 65 will need $280,000 to cover health-related costs. Fortunately, Medicare can help, but there is a set of guidelines and regulations regarding enrollment.

How Medicare and Retiree Coverage Work Together

Some employers may offer retiree health coverage, which can be a good option if you are not yet 65 and do not meet other Medicare eligibility requirements. If you are 65, it may be time to enroll in Medicare.

If you are already 65 when you retire and are interested in having both retiree coverage from your employer AND Medicare, the two can work together.

Your Medicare coverage will always come first. Your retiree coverage will work as extra coverage to backup your Medicare plan – kind of like a Medicare Supplement plan.

While retiree coverage is not a Medicare Supplement plan, it is very similar. It can cover things like copayments and deductibles, or even extra hospital stay days. All retiree plans are different, though, so look over your plan and call your insurance agent (or your former HR representative) to find out what it covers.

Do Retirees have to Pay for Medicare?

There are two parts to Original Medicare – Part A and B. If you have worked and paid Medicare taxes for at least 40 quarters (about 10 years), you can have premium-free Part A. If you did not work the 40 quarter minimum, then you will have to pay the Part A premium. For 2020, the Part A premium is $458 for 30+ quarters or $252 for 30-39 quarters.

The standard Part B premium for 2020 is $144.60, but you may pay more or less based on your own set of circumstances. An estimated 3.5% of beneficiaries will have a lower premium due to the Social Security “hold harmless” provision which prevents premiums from exceeding Social Security benefits. Plus, if you make more than $87,000 a year, your monthly Part B premium will be adjusted based on your income. The income-based 2019 Part B premiums are as follows:

2020 Medicare Part B Premiums
2020 Medicare Part B Premiums

Do you Automatically get Medicare When you Turn 65?

If you currently receive Social Security benefits, you will be automatically enrolled in Medicare Parts A and B the month you turn 65. However, if you do not receive Social Security benefits, you will need to enroll yourself. Medicare enrollment begins three months before your 65th birthday and will end three months after. This is called your initial enrollment period.

It’s important to act right away because delaying your enrollment can result in a 10% Part B premium increase for every year you’re eligible but don’t enroll. If you don’t select prescription drug coverage and later enroll, you may have a penalty of 1% the national base Medicare Part D monthly premium for each month you were not enrolled.

Health Insurance After Retirement Before Medicare (Early Retirement)

Should you keep working or retire early? Your decision may be influenced by your age, health, budget, Medicare eligibility, social security benefits, and employer coverage.

Employer Retiree Coverage

Some employers offer retiree coverage after you leave the company. However, retiree coverage and Medicare are not the same. Retiree coverage is health coverage that is provided to former employees of a company. This typically pays second to Medicare, which means you still need to enroll in Medicare to be fully covered. However, retiree coverage can help with health-related expenses if you retire before 65.

Not every employer offers retiree coverage. Since it isn’t required, your employer (or former employer) can cancel or change your retiree plan at any time. It’s safest for you to have Medicare as well. Plus, if you don’t enroll in Medicare when you first become eligible, you will face a penalty fee. Some retiree plans automatically stop when you turn 65 and become eligible for Medicare.

If your employer does not offer retiree coverage, retiring or losing your job gives you a SEP. A Special Enrollment Period means that you don’t have to wait for AEP, the Annual Enrollment Period, to buy coverage. You will have 60 days from your last day of work to enroll in a marketplace health plan. After those 60 days are over, you’ll have to wait until AEP (October 15 – December 7) to buy a marketplace plan, at which point you will be charged a penalty fee for having a lapse in coverage.

FERS/CSRS Retirement and Medicare

The CSRS, or Civil Service Retirement Act, became effective on August 1, 1920. It was replaced by the Federal Employees Retirement System (FERS) on January 1, 1987. Some people may still belong to CSRS. Both programs are for government employees only.

Both FERS and CSRS allow you to retire at age 62 if you have five or more years of service or at age 60 if you have 20 or more years of experience. Under FERS, you can retire between ages 55 and 57 (depending on your birth year) if you have 30 or more years of service.

Regardless of your FERS or CSRS status, if you’re 65, you’ll qualify for Medicare. You’ll also qualify for Medicare if you have a qualifying disability. If you are under 65 and do not qualify for Medicare, you can receive your FERS or CSRS benefits but will have to wait until you reach Medicare qualifying age.

Until then, you may qualify for the Federal Employees Health Benefits Program (FEHB). Once you do become eligible for Medicare, you may want to enroll in Part A anyway because there is no premium if you’ve worked for at least 40 quarters.

COBRA

When you leave your job, you’ll also have the option to enroll in COBRA. COBRA allows you to continue to belong to your employer’s group plan for a temporary period after you leave the company. The company can “kick you off” at any time, so this is not a permanent option. However, COBRA can help you out while you figure out what your other options are.

Ask your employer or your HR representative to find out what COBRA might look like for you.

Can you get Medicare at age 62?

It’s important to understand the differences between Social Security and Medicare. You can start to receive Social Security retirement benefits at the age of 62. This amount is typically reduced until you reach the age of 65. The average person does not qualify for Medicare until age 65, but there are exceptions.

You are automatically enrolled in Medicare once you have received Social Security benefits for two consecutive years. This means if you started receiving benefits at age 62, you will qualify for Medicare at age 64. Plus, you may qualify for Medicare before 65 if you have Lou Gehrig’s Disease (ALS) or End-Stage Renal Disease.

Importance of Planning for Retirement

It’s never too early to start planning for retirement and Medicare. Our licensed agents can help explain your coverage options and answer all of your questions. Plus, they can provide bias-free assistance with a wide range of plan options because they are licensed with all major carriers in your state. Start planning now! Call us at 833-438-3676 or fill out this form to arrange a no-cost, no-obligation appointment.


This post was originally published on December 27, 2018, and was last updated on November 15, 2019.

Home Care Services vs. Senior Assisted Living

Nearly half of everyone over the age of 65 needs some form of assistance in their daily routine. That’s approximately 18 million seniors! When choosing between home care services and senior assisted living, it’s important to consider the costs, qualifications, and available services before making a final decision.

Home care services allow you to get the assistance you need in the comfort of your own home and is great for anyone who is chronically ill, disabled, recovering from surgery, or needing basic assistance. Senior assisted living is an affordable way to get 24/7 care that includes interaction with other residents and eliminates the need of hiring, scheduling, or managing caregivers. This is great for those who have difficulty moving around and require more medical supervision. Both home care and assisted living focus on providing care, but the specifics of what is provided differ.

What Services Does Home Care Provide?

The three major types of home care services are:

Personal Care and Companionship

Personal care and companionship can provide assistance with self-care including bathing, grooming, and dressing. They also help with fall prevention by assisting with movement around the home. Meal preparation, cooking, light housekeeping, laundry, and other errands are included. Plus, this type of care allows you or a loved one to have companionship which can help with isolation issues, especially in the winter. Personal care and companionship can be long or short-term and is great for those who need basic help around the home.

Private Duty Nursing

Private duty nursing can help with basic medical services inside the home. This includes monitoring vital signs and administering medications. Ventilator, tracheostomy, gastrostomy, catheter, and feeding tube care may also be included. Private duty nursing care is typically long-term and is ideal for those who have a chronic illness, injury, or disability.

Home Health Care

Home health care includes several short-term nursing services. This includes physical therapy, occupational therapy, speech-language pathology, medical social work, and other home health aide services. Home health care is often short-term and is recommended by a physician. Home health care can help patients recover from an injury, illness, or hospital stay.

What is Assisted Living for Seniors and Medicare Eligibles?

Senior assisted living provides 24/7 care, meals, housekeeping, laundry, transportation, recreational activities, and wellness programs. Plus, facilities may offer on-site pharmacies, physical therapy, and even salon services.

Another large benefit of assisted living is social activities and entertainment. Many facilities have common areas including libraries, cafes, and game rooms. Plus, there are several social activities offered like gardening groups, book clubs, and movie nights.

Senior assisted living can help you or a loved one rest easy knowing that all care is personalized to meet any and all health needs.  Emergency first aid, medication management, pharmaceutical services, and maintenance of medical records is often provided to residents. Some facilities have a staff physician who provides routine checkups.

Senior Assisted Living and Home Care Services Costs

It’s important to look at the price tag when making a decision. Home care and assisted living offer different services and their prices reflect that.

What Does Home Care Cost?

The cost of home care services is unique to each situation. According to NPR, the average costs for home care services are:

  • Personal Care and Companionship: $70/day or $18,200/ year
  • Private Duty Nursing: $19/hour or $19,760/year
  • Home Health Care: $21/hour or $21,840/year

There are several companies that provide home care services, but the prices will vary. Plus, there are several other costs that are not included. Keep these in mind when looking at your budget. These costs include groceries, personal hygiene items, household items, transportation, rent or mortgage, utilities, and maintenance.

What is the Average Cost of Senior Assisted Living?

The type of residence, size of the apartment, services included, and location of the community are all factors that can increase the overall cost of senior assisted living. Costs can range from $2,200 to $6,000 per month depending on the cost of living for each state. However, keep in mind these are all-inclusive costs and eliminate the cost of rent, utilities, maintenance, meals, and personal care if you or a loved one lived at home.

Senior Assisted Living and Home Care Services Qualifications

Assisted living and home care each have a specific set of qualifications. Before finalizing on a plan option it’s crucial to know if you qualify.

How Do You Qualify for Home Care?

Within the three types of home care, personal care and companionship is the only type that doesn’t require a prescription. Plus, if Medicare or Medicaid is covering some of the costs, there are different qualifications. To qualify you must meet the “homebound” criteria as established by the Centers for Medicare and Medicaid and require skilled care on a part-time basis in order to improve or maintain your health issue. If you meet these requirements, Medicare will cover your costs, but only if you receive your care from a Medicare-approved home health agency.

Who Qualifies for Assisted Living Facilities?

Qualification for senior assisted living is largely dependent on the level of care a resident needs. You or a loved one may qualify if assistance with daily living facilities like personal care, hygiene assistance, mobility, meals, and medication management is needed.

Those who require daily nursing services from extensive medical needs may not qualify. The application process is the same regardless if you or a loved one lives in a private residence, rehabilitation center, nursing facility, or a hospital. The typical application process includes facility admission paperwork, medical history, physical, and tuberculosis (TB) test or chest x-ray.

Role of Medicare and Medicaid

Medicare only covers the third type of home care services: home health care. The only cost you may have is 20% of the Medicare-approved amount for durable medical equipment. Medicare typically does not cover the costs of senior assisted living. However, Medicare may cover qualified healthcare costs while living in the facility. This includes doctor visits, lab tests, certain preventive services, physical therapy, and medical supplies.

Medicaid may cover some of the costs of home care services, but the coverage will vary by state. In some cases, Medicaid can be used to pay for some assisted living costs through a Medicaid waiver, but there is often a waiting list.

Making a Decision

Home care services and senior assisted living are two options that could greatly impact you or a loved one’s quality of life. There is an abundance of information available which can make finzaling a decision difficult. Are you a caregiver and looking to help a loved one? Our Ultimate Aging Parents Checklist can help you prepare for what is often a tough decision and discussion.

Medicare and Medicaid may only cover a small amount of the total costs. However, Medicare Advantage plans may provide additional coverage beyond Original Medicare and include benefits like hearing, dental, or vision coverage.

At Medicare Plan Finder, our goal is to make sure you have the coverage and benefits that enable you to live the healthiest lifestyle possible. Plus, we make sure you are informed on important information like the Medicaid look-back period and how Medicare and Medicaid work together. Our licensed agents can help answer any questions you may have about Medicare Advantage, prescription drug coverage, and Medicare supplements. If you’re interested in arranging a no-cost, no-obligation appointment, call us today at 833-438-3676 or fill out this form.

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