Retirement is around the corner.
If you are a baby boomer, you are likely in or nearing retirement.
In fact, you may be retiring this year.
And, you are in good company.
Did you know that 10,000 baby boomers turn age 65 … every day?
There is a lot to look forward to in retirement.
Retirement also requires careful planning.
According to a recent The Motley Fool article titled “Retiring in 2020? 3 Things You Need to Know,” there are some things you should consider before putting in your notice to your employer.
What are they?
Social security payments are impacted by your age.
Were you born in 1958?
You will be turning 62 this year.
At 62, you can start collecting Social Security.
If you do this, your benefits will be reduced from the amount you would otherwise receive at full retirement age.
You will need to wait until you are 66 years and 8 months old to reach that full retirement age and collect your full benefit.
Collecting before this means your benefit will be lower the rest of your life.
Were you born between 1943 and 1954?
Your full retirement age is age 66.
Those born in 1954 will be eligible for full retirement benefits this year.
Does this mean you should claim your benefits?
You could increase your monthly benefit each year delay taking Social Security until age 70.
If you wait until age 70, your monetary benefit could be up to 8 percent higher each year.
If you are younger than age 65, you will need to find and pay for your own private health insurance until you are age 65.
You can only enroll for Medicare a few months before your 65th birthday.
If you enter retirement early and lose your employer insurance, you will have a health insurance gap to cover.
Private insurance can be quite costly.
Run the numbers to make sure it is worth retiring before age 65.
You may be able to transfer to a part-time workload to keep employee benefits.
If you are retiring this year and close to turning 65, COBRA may be an option.
What does COBRA do?
It allows you to keep your existing health insurance should you be let go or voluntarily leave your current employment.
You would be bearing the full price of the insurance.
If you would require more than three months of the COBRA benefit, you should probably think of alternative options.
If you have a preexisting condition, you further limit your options.
You should also review the rules of moving to Medicare from COBRA.
These guidelines may be different than moving to Medicare from an employee plan.
By thinking through the implications of your retirement decision in advance, you will set yourself up for a smoother transition out of the workforce and save money in the process.
Reference: The Motley Fool (Dec. 28, 2019) “Retiring in 2020? 3 Things You Need to Know”