Your 65th birthday is a big one, and a milestone worth celebrating. But it also has significant implications for your retirement. Here are three things to keep in mind if you're turning 65 this year.
1. You can sign up for Medicare, and it pays to do so on time
Medicare eligibility starts at age 65, but you can actually sign up a bit beforehand. In fact, your initial enrollment window spans seven months, beginning three months before the month of your 65th birthday and ending three months after that month. It pays to enroll in Medicare on time, because if you don't, you could be penalized in the form of lifelong surcharges on your Part B premiums.
Also, enrolling on time will help ensure that you have coverage when you need it. If you leave your job at 65, for example, and lose your employer health coverage in the process, you'll want Medicare in place. Otherwise, you could be left on the hook for costly healthcare expenses.
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2. But you may not have to sign up for Medicare just yet
While you're entitled to enroll in Medicare at age 65, you may not want to -- or have to. If you're still working and are covered by a group health plan with at least 20 participants, or are married to someone in that boat and therefore have access to that group health plan, you can delay your Medicare enrollment without incurring a penalty for being late to sign up. In that situation, you'll be entitled to a special enrollment period during which you can sign up for Medicare. That period will begin after you separate from your employer or your group health coverage ends, whichever happens sooner.
Now if you're still covered by a group health plan at 65, you may want to enroll in Medicare Part A only, since it's free and can act as a secondary insurer for hospital care. But if you go that route, you won't be allowed to contribute money to a health savings account, so if you have one of those plans, you'll need to weigh your options.
3. If you sign up for Social Security, your benefits will be slashed
You're allowed to file for Social Security as early as age 62, so if you're turning 65 this year, you're already eligible. That said, you won't reach full retirement age until 66 and four months, and if you file for benefits before then, they'll be permanently reduced.
You may be tempted to claim Social Security in conjunction with your Medicare enrollment, but rest assured, you can sign up for Medicare without Social Security if you don't need that money right away. Furthermore, if you're still working and decide to sign up for Social Security, you'll be subject to the earnings test limits, which means you could have some of those benefits withheld if your income exceeds a certain threshold.
Age 65 is definitely a birthday worth celebrating. If you'll be reaching it this year, keep the above points in mind so you make the right choices for your health coverage and Social Security.
