Your 65th birthday is a big milestone to celebrate. If you're turning 65 in the upcoming year, here are a few key points to take note of.
1. You can sign up for Medicare
Medicare coverage begins at age 65, and your initial window to enroll begins three months before the month of your 65th birthday and ends three months after. You can sign up for Medicare at 65 whether you're working or not, but know this: While Part A, which covers hospital care, is generally free for enrollees, Part B, which covers diagnostic and preventive care, costs money. As such, if you're still working at 65 and have heavily subsidized health insurance through your job, enrolling in Part B right away may not make sense.
The way you handle Part A in that situation, however, could depend on whether you're taking advantage of a health savings account (HSA). Since Part A is free, it often pays to enroll as soon as you're eligible, even if you have existing health coverage. Part A will then serve as your secondary insurance, possibly picking up the tab where your primary insurance plan falls short.
But once you enroll in Part A, you can no longer fund an HSA, which means you'll lose out on a host of tax savings and the opportunity to sock away funds for future healthcare costs. As such, you'll need to weigh your decision carefully.
2. You won't get your full monthly benefit if you claim Social Security
You're allowed to start collecting Social Security once you turn 62. But you won't get the full monthly benefit your earnings history entitles you to until you reach full retirement age (FRA).
Your FRA depends on your year of birth, and if you're turning 65 in 2020, it means your FRA is 66 and two months. As such, you'll reduce your monthly benefit by roughly 7.8% if you file for Social Security at 65 versus waiting another 14 months.
Keep in mind that while Medicare and Social Security are related programs, you're allowed to sign up for one without the other. If you wind up enrolling in Medicare in time for your 65th birthday, you can still hold off on claiming Social Security. If you do so, you'll need to pay your monthly Medicare premiums yourself as opposed to having them deducted from your Social Security benefits, which happens automatically once you start collecting them. But a touch of inconvenience is worth avoiding a reduction in benefits if you don't need that Social Security income right away.
3. You may be entitled to a number of senior discounts
There's an upside to getting older, and it's that life can suddenly get a lot cheaper thanks to the many discounts available to seniors today. Once you turn 65, you might start paying less for public transportation, hotels, food, and entertainment. All of that extra money can come in handy if you're still working, but it's especially useful once you retire and move over to a fixed income.
As you gear up to celebrate your 65th birthday, be mindful of what it means in terms of Medicare, Social Security, and money-saving opportunities. And also, take the time to revel in the fact that you're another year older and wiser.