If you're about to turn age 65 (or know someone who is) it's time to consider some things that can greatly affect your finances and healthcare. In the months leading up to -- or in the months immediately following, if you've been a little slow -- your 65th birthday, do the following:
Health-Related Matters
- Enroll in Medicare Part A and Part B. Almost everyone age 65 and older is eligible to enroll in Medicare Part A (inpatient care) and Medicare Part B (outpatient care). You may sign up as early as three months before your 65th birthday to ensure that your coverage begins on the day you turn 65.
- Consider a Medicare Part C managed care plan. Many people age 65 and older enroll in a Medicare Part C Medicare Advantage HMO or other managed care plan. These plans replace and provide broader coverage than traditional Medicare Parts A and B. They are somewhat cheaper than the combination of regular Medicare plus a private Medigap supplemental insurance policy, but they limit the health providers you may use. Some Part C plans include prescription drug coverage.
- Consider a Medicare Part D prescription drug plan. The high cost of prescription drugs leads the majority of people age 65 and over to enroll in a Medicare Part D prescription drug plan, which provides some reduction in yearly drug costs.
- Shop for a Medigap insurance policy to supplement Medicare. Medicare leaves unpaid a large portion of most people's medical bills. To fill in the gaps in Medicare payments, many people buy a private Medigap supplemental insurance policy. Your right to buy the policy of your choice only lasts until six months after you enroll in Medicare Part B.
Medicare can be really confusing -- especially when you are tyurning 65 or trying to enroll and find a plan for the first time. That's why www.iquote.com is sponsoring a free webinar on Jan. 18 providing tips on how to navigate through some of the choices. Check it out on the advice and answers section and please join us if you have time. no cost. no obligation. Hopefully you'll finish the hour more confident about the choices you need to make.
Does this apply if you are still working and covered by your employer's health insurance?
Those with more-substantial wealth should at least explore the benefits of pre-probating their estates with revocable or irrevocable living trusts. I'm not saying everyone would benefit from having a living trust, but everyone should explore the pros and cons of that estate planning vehicle and then make the decisions that best suit their individual and particular means and wishes. If you do like the living trust "combo" with a last will and testament plus a durable power of attorney for health care advocacy (a technical name for a so-called "living will") please do not use a "boiler plate" over the counter software, but rather use a skilled legal and/or tax advisor instead that is very familiar with the pros and cons of the living trust itself and the benefits or consequences on the heirs and beneficiaries of that vehicle.
My parents moved after they turned 65 and these are some things I wish had been in place in the house they moved into. Wider doorways to their bathroom; when mom had hip surgery she had to turn sideways to get her walker in. Also my uncle came down and installed a grab bar to the tub. We had already installed a handicap commode. I installed a lever to replace the knob on the tub faucet. A couple of other things - I got her a nice padded shower bench that one leg goes outside the tub and the other one in so you can just sit down and slide in, then also a tub bar that goes over the side of the tub. We also ended up having to reinstall the back steps because they had been installed with the treader and riser backwards, making the steps too steep - not being discovered until after mom fell down them. This house had been built by a young couple who it didn't bother. They also didn't put rails on the steps, so that's also something that had to be done. My uncles also installed a door into the house from the garage/utility room area. No, it didn't have one; you either had to go up onto the front porch or around to the back one. Young couple again. When my uncles put in the door, when they did those steps, instead of just doing steps, they made more of a landing area at the door and nice wide, deep steps with a nice not steep stairway type design, if you can picture; much nicer for them so they really didn't use the outside stairs that much anyway especially after she fell but we fixed them anyway after that. Anyway just some thoughts and things to look for. One other thing, almost as soon as mom died dad had me go with him to the bank and have me put on his (their) checking account (taking her off) but he didn't touch their CD(s) because it wasn't due yet and it would mess it up then he's begun to forget about getting it done so I'm expecting that to be a problem; I wish he'd just gone ahead and taken care of it all while we were there. I think I wish the bank had encouraged it a little more rather than explaining the financial ramifications more to him expecting him to remember it; I think I know they have to do it that way unless they have reason to believe he won't but I wish there were a better way. Oh well, just some of my thoughts with my experience.
I recommend quite often to my own tax customers that they start their own businesses and use the best legal and tax entity available, which is commonly either a "C" corporation but otherwise an "S" corporation type (*with reservations*). Reservations about "S" corporations: S-corps work best when dealing with pass-through dividends and/or losses as well as with capital gains expectations (like with real estate, stocks and bonds investments, etc.). They also have a compulsory and mandatory requirement for owner/operators to take "a reasonable amount of W-2 compensation." You would be well-advised to discuss your goals and circumstances with a federally-licensed Enrolled Agent to determine how best to proceed with this idea of incorporation for both limited liability and wealth retention purposes. You can locate an EA by visiting www.naea.org (they have a national and international list of qualified Enrolled Agent).
I would also add that people should analyze their living environment for it's aging in place suitability and make the necessary changes now as well as develop an aging in place plan that includes learning about available services and providers. Far too many people wait until there is a crisis and have to put a plan together in a hurry, utilizing the first services they find, not necessarily the best services for them.
You may purchase a medicare supplement insurance policy after you turn 65. Purchasing a medicare supplement during the first 6months after turning 65 is considered one's "open enrollment" and means that underwriting is not used. If you miss your "open enrollment" or decide to purchase a medicare supplement at a different age, such as age 67 or 70, underwriting may be used, but it is still very likely that you can qualify for a medicare supplement insurance policy.
A couple other notes: Reduce your debt to the minimum. No car debt and absolutely no credit card debt is essential to a good retirement plan. The only debt you should take into retirement is your house mortgage, and the less that is, the better. Second, remember that Social Security checks don't come until the month AFTER you retire. I had to pay an extra month of living out of my savings because I didn't realize that when I gave notice to my employer. Had I known that I would have worked another 2 weeks to a month. If your retire Jan 1, your first check won't come until February- and if your last name is in the last part of the alphabet - it will be the fourth Wednesday of that month!
Done, done, done and done. If you haven't done all four and you're about to turn 65 you shall regret your decision.
Working in the health care field of senior adults--we see first hand that it's best to use regular Medicare---purchase a supplement if desired but the Medicare part c managed care (HMO) limits more than medicare does.
Someone needs to write about making sure your accounts have beneficiaries when you change savings accts, CD's, MM. As a family we did all the right things, but the bank did not make sure we had a beneficary on a NEW checking account that we had and it had to be probated. Watch out for changes to your individual CD's, savings, etc. Each one has to have Beneficiaries named.