Social Security: How To Time When You Receive Benefits, the Switch to Medicare and Long-Term Care
Written by
Vance Cariaga
Edited by
Melanie Grafil
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You might have visions of a stress-free retirement filled with fun and leisure, but before you get there you’ll need to make some important decisions involving Social Security benefits, Medicare and long-term care. Much of the process will center on when to sign up for benefits.
In terms of Social Security, the conventional wisdom is that you should wait as long as possible to claim benefits because the longer you wait, the higher your monthly payment. You can sign up for retirement benefits as early as age 62. After that, your payment goes up for each year you wait.
When you hit full retirement age — 66 or 67, depending on your birthdate — you get the full benefits you are entitled to based on your work record. Your maximum benefit comes when you wait until age 70 to sign up.
Medicare Timing a Bit Simpler, But Long-Term Care Is All About Context
Medicare is a little more straightforward because you don’t become eligible until age 65, and most Americans sign up at that age, according to the Social Security Administration. As the SSA noted, it’s important to sign up for Medicare promptly to avoid gaps in coverage or late enrollment penalties.
But if you’re already covered through an employer group health plan, it might make sense to sign up for Medicare later or delay Part B. If you are age 65 or older and receive Social Security benefits, you’ll be automatically enrolled in Part A.
The timing of long-term care is much trickier because so much of your decision depends on your health and finances. But the National Institute on Aging recommends strategizing long-term care “before you need it.”
“Planning for the possibility of long-term care gives you and your family time to learn about services available in your community and what they cost,” the Institute noted in a report. “It also allows you to make important decisions while you are still able.”
Long-Term Care Insurance and Social Security Benefits
One move you can make in terms of timing long-term care is signing up for long-term care insurance — and many experts recommend doing that as early as your mid-50s to lock in the best prices.
As for timing your Social Security benefits: This topic was addressed in a Dec. 4 Forbes column written by Jerry Patterson, president of Fidelity Investments Life Insurance Company. He found that while many financial advisors recommend waiting as along as possible to sign up for Social Security, research shows that only about 10% of eligible recipients wait until age 70 to file.
“Another way to look at this is to calculate the break-even point where the value of waiting outweighs taking the money early,” Patterson wrote. “Let’s say you’re 60 and the break-even age is 68. In this example, if you believe you will live to be 68 or older, you may be better off waiting longer and maximizing your benefits versus taking the money at 62.”
In Patterson’s own case, he is “leaning toward’ taking the money early and “enjoying the value it creates” early on in retirement so he can pursue hobbies and interests.
“I am not sure I will benefit as much in my 70s by having a little extra cash as my ‘Go-Go’ lifestyle may begin to slow down,” Patterson wrote. “With that said, I have an 85-year-old mother-in-law who has not stopped ‘Go-Going’ since the day she retired, so you never know. The bottom line is that there is no ‘right’ answer relative to claiming Social Security. It’s a deeply personal journey, and I think it’s important to think about both the mathematical and emotional implications of waiting versus taking the money earlier.”
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