Turning 65 is a major life milestone and checkpoint for your retirement planning. Not only is this an important age for government programs like Medicare, but it's also an ideal time to check other parts of your financial plan, especially if you're about to retire. This quick checklist covers some of the most important things you should review.
1. Prepare for Medicare
When you turn 65, you're eligible to sign up for Medicare Part A and Part B. If you're already on Social Security, you'll be automatically enrolled. Otherwise, you need to sign up manually with the Social Security Administration.
You can first apply for Medicare during the three months before your 65th birthday. By applying early, you ensure your coverage will start the day you turn 65. You can also apply the month you turn 65 or within the following three months without penalty, though your coverage will then start after your birthday.
If you don't apply during this enrollment period, you can still sign up later, but the government will charge you a penalty — so your Medicare premiums will be higher during retirement. You could delay enrollment penalty-free if you still have group coverage from an employer. Otherwise, aim to sign up for Medicare by your 65th birthday.
2. Consider Additional Health Insurance
While Medicare covers most of your health care bills, you're still responsible for some large out-of-pocket costs. Medicare Parts A and B also won't cover prescription drugs. When you turn 65 and first join Medicare, you qualify for an enrollment period that lets you sign up for private insurance to cover these costs.
You could get a Medigap plan or a Medicare Advantage plan as well as a Medicare Part D plan for prescriptions. Be sure to do this before you turn 65 — if you wait to sign up, it gets more complicated. You can only sign up for Medicare Advantage and Part D plans during open enrollment, and you'd need to pass medical underwriting for Medigap.
3. Review Your Social Security Benefits Plan
You can choose when to start collecting Social Security benefits any time within ages 62 to 70. If you've started payments, then you've already made this decision for your retirement planning. If you haven't started collecting payments yet, consider when you'd like to begin.
The longer you wait, the larger your monthly payments will be until they max out when you turn 70. At age 65, decide whether you need that extra income now or if you'd rather wait a little longer so you can earn more for the rest of your retirement.
4. Plan Ahead for Long-Term Care Costs
Long-term care includes staying in a nursing home or assisted living facility as well as at-home paid nursing care. Assisted living facilities cost on average $3,628 per month, while a private room in a nursing home averages $7,698 per month, according to the U.S. Department of Health and Human Services.
To cover these costs, one option is to buy a long-term care insurance policy. At age 65, you still have a good chance to qualify, but it gets more difficult as you get older. Alternatively, you can put aside some of your savings to prepare for these expenses.
5. Review Your Retirement Accounts and Investments
Before turning 65, you should also consider your retirement planning investment strategy. As you get older, the focus should shift from growing your savings through stocks to protecting your nest egg as well as generating income through safer assets like bonds. Look up your different retirement accounts and make sure the investment mix matches your goals.
6. Update Your Estate Planning Documents
Your estate plan covers your intentions for both the possibility that you become seriously ill and after you pass away. Some key documents include a will, a living will/medical directive and a financial power of attorney. If you have these documents in place, check to make sure everything is accurate and up-to-date. If you haven't created your estate plan yet, you can work with an attorney to prepare everything.
Age 65 is the right time to check off those final retirement planning boxes. To make sure your plans are in good shape, consider reviewing this checklist with an insurance specialist or a financial advisor.