5 Things You Need To Know About Finances When Turning 65

Gone are the days when most people retired at 65, received a gold watch, then lived off their pension and full Social Security benefits. But 65 is still an important age financially for retirees and near retirees – both in terms of what you get and what you don’t get. It’s essential to know the new rules for Social Security, healthcare, taxes, and retirement savings so you can make the most of your benefits and avoid costly mistakes.

  1. You still haven’t reached full retirement age

This is a big change from your parents’ retirement. For decades, 65 was the magic age for receiving full Social Security benefits. But that age started to increase for people born in 1938 or later. It’s age 66 for people born in 1943-54, and then rises by two months every year until it tops at age 67 for people born in 1960 or later.

  1. You can sign up for Medicare

That one hasn’t changed; you can still get Medicare coverage at age 65. But the sign-up rules are tricky if you haven’t started receiving Social Security benefits yet. If you enrolled in Social Security early, you’ll automatically be enrolled in Medicare at 65. But if you haven’t signed up for Social Security, then you need to take steps to enroll in Medicare.

You have a seven-month window to sign up for Medicare – three months before your birthday, your birthday month, and three months after that. You can sign up for Medicare online at the Social Security website, even if you aren’t signing up for Social Security benefits yet.

  1. You can use your HSA for more expenses

A health savings account (HSA) can provide a triple tax break: your contributions are tax-deductible (or pre-tax if through your employer), the money grows tax-deferred, and you can withdraw it-tax free for eligible medical expenses at any time. And when you turn age 65, you can withdraw the money tax-free for even more expenses.

You have to stop making HSA contributions when you enroll in Medicare Part A or Part B, but some people who are still working for a larger employer delay signing up for Medicare so they can contribute to an HSA.

  1. You get a bigger standard deduction and other tax breaks

Starting in the year you turn 65, you qualify for a larger standard deduction when you file your federal income-tax return. Low-income people 65 or older may also qualify for the Tax Credit for the Elderly or Disabled. The IRS has more tax tips for older taxpayers, visit their website to learn more.

  1. You can still save for retirement

If you’re doing any work at 65, even if it’s just part-time or freelance, you can continue to save for retirement. You can contribute to a Roth or traditional IRA at any age, as long as you earned some income from working, according to the SECURE Act of 2019. You cannot contribute an amount that exceeds your earnings, and you can only contribute up to the IRS-set contribution limits.

Connect with an advisor in your area to find out if your retirement is on track.