We spend our entire careers preparing for our much anticipated retirement years. This is a time to celebrate! It’s also a time when many important decisions need to be made. While these decisions may seem overwhelming, they don’t have to be. At Kletschke Wealth Management Group, we encourage these conversations with our clients well before they turn 65.
You will become eligible for Medicare at age 65 and can apply for benefits if you are not already receiving Social Security. There is a seven-month sign-up period that starts three months before you turn 65. You will have plenty of choices for your Medicare plan. Medicare does have costs depending on your coverage choice and your income. You may be able to start Medicare coverage later if you are covered by a qualified employer sponsored healthcare plan. If you delay signing up without other qualified coverage, you may pay a penalty, so it is important to understand the program. To learn more, visit: www.medicare.gov.
Age 65 is not full retirement age (FRA) for Social Security purposes. Depending on the year you were born, it will be age 66 or later. We make sure our clients understand the pitfalls of claiming at age 62 (the earliest possible age), as many fall into the trap of believing “they’ve earned it.” In doing this, you greatly reduce your benefit, and if you are still working and earning above the earnings threshold, your benefits will be further reduced. Note: Taking Social Security early is a permanent reduction to benefits and will not be paid back. That’s why we have this conversation with clients before they turn 60 so they can take full advantage of their claiming options. If you are still working or don’t need the money, you can delay receiving your benefits until age 70. In doing so, your benefits grow each year up to age 70.
According to the U.S. Department of Health & Human Services, nearly 50% of individuals who are 65 will require some form of care during their lifetimes.1 A 2019 survey by Genworth found that the average daily cost of assisted living is $133 per day, and a private room in a nursing home averages $280 per day.2 We may suggest self-pay if you have a net worth of $2 million or greater. If you are under that level, explore insured options like long-term care (LTC) policies or life insurance with a LTC rider.
Age 65 is far from the end of your life, but as we age, our health risks inevitably increase. Use this milestone to get your affairs in order so your family is better taken care of. Review your will, trust, and powers of attorney for your finances and health. These documents should be reviewed every three to five years or after a major life event. If you don’t have these documents in place or need to address changes to them, contact your attorney.
If you are still working, these next few years may be your last chance to build up your nest egg. Consider making the maximum contribution to your employer’s retirement plan, your Roth IRA and/or traditional IRA, and your health savings account (HSA). If your budget allows, you can also add funds to a non-retirement account.
When you do retire, you will need a realistic plan to help your money last as long as you need it to. We work with our clients to map out a plan that factors in inflation, risk-adjusted returns, different market cycles, and flexibility for various tax scenarios and life events. Working with our team can help you at any age.
If you are interested in professional guidance, contact Kim, Korey, or Tyler at Kletschke Wealth Management Group today!
Kletschke Wealth Management Group
700 4th Street, Suite 100
Sioux City, Iowa 51101
1 U.S. Department of Health & Human Services, “What is the Lifetime Risk of Needing and Receiving Long-Term Services and Supports?,” 2019
2 Genworth Cost of Care Survey 2019, “Skyrocketing care costs may make the dream of aging at home more challenging,” 2019