Once you turn 65, you're eligible to sign up for Medicare. And if you're no longer working at the time, or aren't married to someone with a group health plan, then that's a route you may want to take.
In fact, once you lose access to a group health plan (your own or a spouse's), you risk facing surcharges on your Medicare Part B premiums if you don't enroll for coverage in time. And so if, come age 65, you don't have access to group health insurance, signing up for Medicare makes sense.
Now if you're signing up for Medicare, you may be inclined to file for Social Security at the same time. But whether that's a good idea or not depends on your age.
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It's all about timing
While Medicare eligibility kicks in at age 65, you may end up signing up at a later age due to having group health coverage until then. And if that's the case, then claiming Social Security at the same time may end up being a good idea.
But if you're enrolling in Medicare at age 65, then you may want to think twice about filing for Social Security. That's because you're not entitled to your full monthly Social Security benefit until you reach full retirement age, or FRA.
FRA hinges on your year of birth and kicks in at 66, 67, or somewhere in between. But if you file for Social Security before reaching FRA, your benefits will be reduced on a permanent basis. And as such, if you sign up for them at age 65 in conjunction with enrolling in Medicare, you could end up slashing your benefits by up to 13.34%, depending on your precise FRA.
Now if you're signing up for Medicare at age 67 and your FRA is 67, then there's less harm in enrolling in both simultaneously. Of course, delaying Social Security past FRA gives you a chance to boost your benefits by 8% a year -- for life -- up until age 70. But filing at your precise FRA is certainly a reasonable route to take, especially if you're not looking to delay your retirement.
Be careful when filing for Medicare and Social Security
If you're enrolled in Medicare and Social Security at the same time, then your Part B premiums will be deducted from your Social Security benefits automatically. But that doesn't mean you can't sign up for Medicare without being on Social Security.
If you go that route, all it means is that you'll need to pay your Part B premiums directly. But you'll also have options to automate that process so it isn't a burden.
Of course, you may decide to sign up for Medicare at age 65 and claim Social Security then, despite the hit to your benefits that might ensure. There's nothing wrong with doing that if you've run the numbers and determined that that makes sense. The key, however, is to understand the ramifications of signing up for Social Security early -- and also, to recognize the consequences that might ensue if you don't sign up for Medicare on time.
