Source: Ian MacKenzie via Flickr.

Millions of Baby Boomers are reaching retirement age every year. If you're one of the lucky ones who has decided to hang up your work shoes for good, congratulations are in order. The promise of a happy retirement keeps many workers looking forward for years, and when the time finally comes, it opens an exciting time in your life.

To make your retirement as good as it can be, you'll want to know about some key financial matters. Preparing for these beforehand, and getting them taken care of quickly when you retire, can make your retirement years more financially secure and leave you feeling better about your golden years. Let's take a look at four things everyone should know if they're retiring in 2015.

Source: SSA Office of the Inspector General.

1. How to claim Social Security
Social Security is a key source of income for most retirees, and if you've decided to claim your benefits right away after retiring, the Social Security Administration offers a streamlined process to get your monthly checks started. New applicants who are within three months of their 62nd birthday and want benefits to start within the next four months can use the SSA website to apply for retirement benefits online. The process takes as little as 15 minutes, and involves providing some personal information and answering some basic questions. Typically, the SSA will either contact you if it needs more information, or simply start processing your application to give you a final decision.

For those without online access, the SSA offers a toll-free help line from 7 a.m. to 7 p.m. weekdays at 1-800-772-1213. Local Social Security offices throughout the country are also available if you want to speak to a person face-to-face. Whatever method you use to apply, starting your Social Security benefits isn't a difficult process -- even if deciding the best time to start receiving those benefits can be.

2. When to sign up for Medicare
Social Security gives you a lot of flexibility regarding when you can claim benefits, with most people eligible anytime between ages 62 and 70. But the Medicare program is a lot less flexible. Medicare eligibility begins for most people at age 65, and if you're already getting Social Security benefits at that point, you'll automatically get enrolled on the first day of the month you turn 65.


If you're still working at age 65, automatic Medicare enrollment won't always happen, and signing up for Medicare around your 65th birthday is important to avoid any penalties. The window for most people to apply begins three months before you turn 65 and ends three months after your birthday. Exceptions apply, though, if you've had coverage under a group health plan at work; in this case, you have up to eight months after you stop working and lose coverage under the plan. Those who don't sign up on time have to pay higher premiums, with Part B monthly premiums rising by 10% for each full year you apply for Medicare benefits late, and other penalties applying for late Part A and Part D coverage.

3. Make your investments more income friendly
Once you stop working, a major source of income disappears, and Social Security isn't likely to replace all of your lost wages and salary. It's important to look at your retirement savings to figure out how you'll tap it to cover living expenses.

Some retirees assume that when they quit work, they need to sell all their stocks and focus on safer investments. But with retirement potentially lasting 30 years or more, keeping some stock exposure is crucial. By focusing on dividend stocks with solid payouts, you can collect income from your investments and still have prospects for growth in your retirement nest egg.

Source: via Flickr.

4. Know the tax implications of big financial moves
Another source of income retirees use is withdrawing money from IRAs, 401(k)s, and other tax-favored retirement savings accounts. But when you use those funds, you need to understand what it means for your taxes.

If you take money out of a traditional IRA or 401(k), then you'll have to include the amount you take out as taxable income on your tax return. That can leave you with a larger tax bill than you expect, and many retirees then have to tap their retirement accounts again to pay their taxes. On the other hand, if you have Roth IRA or Roth 401(k) accounts, distributions are generally tax-free, meaning you get to use 100% of the money for your own purposes.

Retirement should be a happy time, and it can be if you have your finances in order. Knowing these four aspects of retirement finances should help get your golden years started on the right foot.