Category Archives: Retirement Planning

Ideas to help preserve and grow your money

Turning 65 this year? Don’t overlook these 3 steps

retirement_roadMy Comments: The transition from working FOR money to having money FOR YOU is full of tension and hard to answer questions. If you’re beyond this stage, then don’t bother with this. On the other hand, if it’s today or in your future, then this is good stuff.

Gail MarksJarvis / The Chicago Tribune / January 6, 2017

If you will be turning 65 this year and plan to keep working, you have essential money decisions to make that can’t be ignored.

The arrival of your 65th birthday requires that you take specific steps so you don’t get in trouble with the government on Medicare rules and face fines later. And the years around your birthday command attention to money details that could make the difference between having plenty of money for retirement and running out of funds early. So don’t drift by this major time in your life without attention to the three issues people at age 65, or near retirement, must address.

Sign up for Medicare. When you are 65, you will be eligible to start taking Medicare to cover some of your doctor, hospital and other medical costs. Full Medicare coverage is not free so you typically don’t want to start taking it if you are still working full time, aren’t on Social Security and will have solid, affordable medical coverage at work until you decide to retire. But you can sign up for Medicare at 65 and get a small part of Medicare — the free benefits that cover some hospital care — even if you don’t need the full Medicare package while working. (See http://www.ssa.gov/pubs/EN-05-10530.pdf.) Signing up doesn’t have to mean you give up your health insurance at work. And the hospital coverage you get free through Medicare Part A can supplement the health insurance you have through your workplace insurance, said Philip Moeller, who walks people through the confusing Medicare requirements in his book, “Get What’s Yours for Medicare.”

If you are going to keep working after 65, you simply say on the Medicare form you fill out that you won’t be claiming the form of insurance yet that covers doctors because you have solid coverage through work. (See faq.ssa.gov/link/portal/34011/34019/Article/3773/How-do-I-sign-up-for-Medicare.) In other words, you aren’t taking Medicare Part B at that time. Part B is the Medicare insurance that you will use later in retirement to pay for doctors, outpatient treatment and supplies like knee braces or walkers.

After doing the basic sign-up at age 65, you will get a Medicare card in the mail and you will start being eligible for one of the three parts of Medicare: Part A. Later, when you actually retire, or when you don’t have solid medical insurance through work, you will need to sign up for full Medicare coverage. Then, you will be able to rely on all three parts of Medicare — Part A for hospitals, Part B for doctors, equipment like leg braces and walkers and outpatient medical services, and Part D for some prescriptions. For Part B, you will pay premiums each month — typically $104.90, although what you pay depends on your income. Your drug Part D cost depends on the plan you choose from numerous insurance companies, and you need to scrutinize them carefully to make sure they cover your particular prescriptions. Monthly premiums for popular drug plans range from about $18 to more than $66 and swing dramatically depending on where you live, Moeller said.

If you plan to rely on your employer insurance while working, beware: Employers can’t kick you out of their health insurance at 65 or as you age, but that rule applies only to businesses with 20 or more employees, Moeller notes. So if you work for a small company with only a few employees, at age 65 you could end up needing to sign up for Medicare and also start using — and paying for — all three types of Medicare: Parts A, B and D. Your employer is supposed to tell you if your insurance through work is considered to be sufficient enough that you don’t have to apply for full Medicare. If not, you will have to apply for full Medicare including Parts A and B.

If you don’t have acceptable coverage at work, and fail to sign up for Medicare when 65, the government can penalize you throughout your retirement. When you start using Medicare Part B for doctors, the penalties could boost your monthly payments by 10 percent for each full 12-month period. (See http://www.medicare.gov/your-medicare-costs/part-b-costs/penalty/part-b-late-enrollment-penalty.html.) If you miss the deadline for signing up for drug coverage through Part D, another penalty on drug coverage can last through retirement. (See http://www.medicare.gov/part-d/costs/penalty/part-d-late-enrollment-penalty.html.) There are specific times during the year when you must enroll. Make sure you pay attention to enrollment periods because there is no leeway.

If possible, wait on Social Security. Although you can start getting Medicare at age 65, and must pay attention to paperwork then, Social Security is different.

You don’t have to apply for Social Security at a certain age, and the longer you wait, the better. Most people who are around 65 now won’t be able to retire and get full Social Security retirement benefits until they are at least 66. If they are healthy and can work until 70, they will boost their Social Security benefits significantly. For each year a person waits to retire after 66, the person can increase his or her Social Security payments 8 percent a year. And there are also cost-of-living increases in Social Security benefits annually. Those payments are guaranteed. You aren’t going to find a guarantee like that in any investment. That makes waiting to retire a smart move if possible.

Budgeting and investing. When you start depending on Medicare, you will not be able to count on it for all your medical needs. Full Medicare covers only about half of your medical expenses. So as you plan for retirement, you will need to shop for supplemental insurance that picks up where Medicare leaves off. There are two types: Medigap insurance and Medicare Advantage plans. They differ in what they charge, what they cover, and whether they apply to your community, or cover your medicines, your doctors and the places where you might travel. Costs vary broadly with some of the expensive Medigap plans costing well over $600 a month per person. (See Medicare’s PlanFinder http://www.medicare.gov/find-a-plan/questions/home.aspx.)

Also, realize that your income impacts what you will be charged for Medicare and the taxes you pay on Social Security. So financial planners suggest that people examine their savings a few years before retiring to ensure that during retirement they have a blend of IRA and Roth IRA plans. Roth IRAs don’t get taxed in retirement and IRAs are taxed. So by plucking a little money from each of the two plans for expenses each year, retirees can keep their taxes down and hold on to more of their Social Security and Medicare benefits than they would if they didn’t consider tax implications.

The Face of Retirement is Changing

retirement_roadMy Comments: 30 years ago, my vision of retirement was as vague as what you see if you stand outside on a clear dark night and look upward. A vast empty space with millions of tiny points of light, far away and mysterious.

Today, not so much. I tried it a few years ago and began to suffer from terminal boredom. Plus having more money helps. It’s just the joints and muscles won’t cooperate like they did 30 years ago.

Steve Savant on October 12, 2016

Many of the rock icons and Hollywood stars of the baby boomer generation are in sixties. The flower children of the sixties are now in their sixties. This is the changing face of retirement. 10,000 baby boomers turning age 65 everyday.

In the last generation, most retirees have a pension and Social Security. But today many employers have migrated from pensions to defined contribution plans.

From 1985 to 2000, the rate of participation in pensions by full-time employees of medium and large private firms dropped from 80 percent to 36 percent. A 2013 survey by the Bureau of Labor Statistics found only 26 percent of civilian workers in the U.S. participated in defined benefit pension plans. The boomer generation is often referred to as the “sandwich generation,” because they are paying for their parents’ elder care as well as the tuition of their children. When you add the funding of their retirement plan, there’s not much money left to pay off a mortgage.

Presidential candidates have promised Social Security will not be altered for baby boomers, but Congress has changed things over the years. With the most recent changes coming with the passing of the Bipartisan Budget Act of 2015, most baby boomers lost income from the elimination of the “file and suspend” provision and age tested restrictive application benefits. But perhaps the biggest change and the greatest risk in retirement isn’t legislation, but living longer.

Today, the average life expectancy for men is 86.6 years and for women 88.8. The impact of longevity on retirement modeling has created an environment fear among of among seniors of outliving their money. One answer to longevity problem maybe annuities. Annuities can be structured to pay guaranteed lifetime income with annual increases. Today, more retirement plans are using guaranteed lifetime annuity income to pay for household living and travel expenses. The structured payout can cover two lives and provide income for the survivor.

Two years ago, Qualified Longevity Annuity Contracts or QLACs, were introduced. The key part of the legislation was to offer the option to defer required minimum distributions or RMDs at age 70½ to age 85 from qualified plans like 401(k)s. The rules of engagement allow deferring 25 percent of qualified plan monies not to exceed $125,000 per participant to age 85. QLACs use deferred income annuities that can guarantee income for life. Controlling RMDs with QLACs can have a significant impact on retirement taxation and may insulate a portion of Social Security income from taxation as well. Annuities are not insured by the FDIC or any government agency. So it’s important to have your financial advisor review the balance sheet and ratings of the insurance company before you purchase an annuity.

5 Smart 401(k) Moves to Make Now

financial freedomMy Comments: You say you don’t have a 401(k)? Maybe you have a 403(b), or an IRA with exposure to the market. If you are in or close to retirement and your investment portfolio goes to hell, you simply don’t have enough time to hope it recovers and gets back on track. Be defensive for a while and sleep better at night.

by Carolyn Bigda | September 26, 2016


Storm clouds are forming, so take your nest egg off autopilot and steer to clearer skies.

Blissfully, making your 401(k) grow hasn’t been that hard in recent years. Since March 2009, the S&P 500 index of U.S. stocks has more than tripled in value. And thanks to the Pension Protection Act—now celebrating its 10th anniversary—many workers are automatically enrolled in 401(k)s. “Inertia has led to some pretty powerful results,” says Katie Taylor, director of thought leadership at Fidelity.

But inertia works only as long as the winds are blowing in the right direction. Today there are signs that momentum could be shifting. U.S. equities, for one, are as frothy now as they were leading up to the 2007–09 bear market and the Great Depression in 1929. The S&P 500 trades at a price/earnings ratio of 27.3 based on 10 years of averaged profits, a 63% premium to historical averages.

Meanwhile, corporate profits have been declining for five consecutive quarters, the worst such streak since the financial panic. And worried fund managers have amassed large piles of cash, according to a recent Bank of America Merrill Lynch survey.

None of this means your 401(k) needs a major overhaul. This is, after all, your long-term portfolio, meant to endure choppy air from time to time. But a few tweaks now can help ensure that inertia doesn’t work against you—and that you’re still on track no matter what happens in the market.

Get over your fear of bonds

If you haven’t rebalanced your 401(k) in a while, it probably looks different from what you remember. Without rebalancing, a moderate 60% U.S. stock/40% U.S. bond portfolio at the end of the last recession is now closer to an aggressive 80% equities/20% bond mix, according to Morningstar.

The rule of thumb: If your weightings are off-kilter by five percentage points or more from your desired mix, it’s time to take action.

Some investors, though, may be wary of rebalancing into bonds now, notes Maria Bruno, a senior investment analyst in Vanguard’s investment strategy group. That’s in part because fixed-income prices fall when interest rates rise, and the Federal Reserve could lift rates before the year is out.

But “rebalancing helps protect you from short-term volatility,” Bruno notes. Even if fixed-income prices fall, bonds can still serve as a cushion. The worst calendar-year loss for intermediate-term government bonds was 5.1%, in 1994. By contrast, the worst loss for blue-chip U.S. stocks was 43.3%, in 1931.

You can further reduce risk by choosing bond funds with an average “duration” of about five years or less, which are less sensitive to interest-rate moves, says Peter Mallouk, president of Creative Planning in Leawood, Kans. (A duration of five implies that if rates rise one percentage point, the fund could lose 5% in value.) You can look up this figure for your plan’s fixed-income offerings at Morningstar.com. If your 401(k) doesn’t offer a good low-duration option, go with a core fund such as Dodge & Cox Income DODIX 0% , with a duration of just four years, in your IRA. The fund, which has beaten more than 80% of its peers over the past five, 10, and 15 years, is in our MONEY 50 recommended list.
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Need More Money?

Piggy Bank 1My Comments: We live in a society where having more money is considered better than having less money. Would you agree?

That being said, many of us who are now retired or retired and are now working again, are trying to figure out how much we need. There is no definitive answer for any of us, but in many respects, how much we need is a function of how we phrase the questions.

Apr 9, 2016 By Shlomo Benartzi

It’s conventional wisdom among financial advisers: People planning to retire should aim to maintain 70% of their current income in retirement.

It sounds sensible enough. But in reality it can encourage people to underestimate the amount of money that will keep them content in retirement.

The 70% rule leads us astray because it fails to address the emotional cost of losing 30% of our income. Most people focus on the 70% they will keep, not the spending they will give up. They aren’t prepared for the changes that will be required in their lifestyles. When they eventually are confronted by the specifics they have to cut, they are unhappy. In short, the 70% rule makes the future seem secure and comfortable, even when it’s not.

Behavioral economists refer to this as a framing effect. Similar examples abound in everyday life, as people find choices far more appealing when they are framed in terms of gains rather than losses. For instance, people are more likely to buy ground beef when it’s described as 75% lean rather than 25% fat. They think a condom with a 95% success rate is safe, but are scared of one with a 5% failure rate.

Framing effects can even shape our estimates of longevity. Research by a group led by John Payne, a professor at Duke University’s Fuqua School of Business, finds that when people are asked to estimate their lifespan using different frames, they come up with strikingly different answers. In particular, asking subjects if they will “live to” a certain age leads to estimates that are roughly six to nine years longer than asking if they will “die by” a given age.

Why? One explanation is the “live to” frame focuses our thoughts on the reasons we might stay alive. When people are given the death frame, by contrast, their minds are naturally drawn to the reasons they might die. Instead of thinking about their healthy exercise habits, they focus on their love of hamburgers.

Framing effects matter because they shape our perceptions of the world and the content of our thoughts. The question hasn’t changed, but the frame can determine how we judge alternatives and what we end up choosing.

So how can we ensure that framing effects don’t ruin our retirement? Here’s my proposal: Before workers settle on a retirement-savings goal, or decide it’s time to retire, they should undergo a behavioral stress test. In short, they should be asked to identify three expense categories they will cut in retirement, with instructions to be as specific as possible as to what exactly they will cut. These cuts should be significant enough to add up to approximately 30% of their current spending.

In my experience, while most people find the 70% rule palatable, they find the 30% frame unacceptable. When asked to think specifically about where they would be willing to sacrifice—perhaps dining out, travel, or spoiling the grandchildren—that is when they become more aware of how much they are being asked to give up.

And that’s the point of a behavioral stress test.

The key insight is that people need to be exposed to both gain and loss frames to be able to make realistic decisions about the income they will need in retirement. Behaviorally, neither frame by itself is sufficient. While the gain frame can lead people to underestimate the amount of sacrifice that will be necessary, the loss frame might cause them to think too negatively about the consequences of those sacrifices. Indeed, economic research has shown that big differences in income typically result in minor differences in happiness.

The behavioral stress test probably will encourage most people to increase their retirement-savings goals, and thus have more income in their later years, allowing them to avoid giving up certain pleasures and activities.

It is the same for banks when they undergo stress tests in an effort to determine their ability to withstand a financial crisis. The tests help them identify hidden risks and correct mistaken models before it’s too late.

By considering both gain and loss frames, we can start to figure out what we really want—and what we definitely don’t want to live without.

Shlomo Benartzi is a professor and co-head of the behavioral decision-making group at UCLA Anderson School of Management, and author of “The Smarter Screen” about online behavior. He can be reached at reports@wsj.com.

10 Retirement Decisions You Will Regret Forever

My Comments: This list comes from Kiplinger, and is relevant to many of the people I talk with daily. I’ve only include two of the ten here. To to find the rest you’ll need to click on any of the images which will take you to the Kiplinger site. If for any reason, they block you out, let me know and I’ll figure out a work around for you.

By Bob Niedt

As more and more baby boomers start eyeing the coastline of retirement, thoughts turn from the daily worry over the Monday-through-Friday commute to concerns about how to fund the golden years.

How prepared are you? Do you know the ins and outs of your pension (if you’re lucky enough to have one)? How about your 401(k), IRA and other retirement accounts that make up your nest egg? Do you have a good handle on when to claim Social Security benefits? These are some of the questions you will have to contemplate as the work days wind down. But long before you punch out, make sure you are making the right choices.
To help you out, we’ve compiled a list of retirement decisions some of you may regret forever. Take a look to see if any sound familiar.

Planning to work indefinitely
Many baby boomers like me have every intention of staying on the job until 70, either because we want to, we have to, or we desire to maximize our Social Security checks. But that plan could backfire. You could be forced to retire early for any number of reasons.

Consider this: One in four U.S. workers expects to work beyond age 70 to make ends meet, according to a recent Willis Towers Watson survey. Yet, you can’t count on being able to bring in a paycheck if you need it. While 51% of workers expect to continue working some in retirement, found a separate 2015 survey from the Transamerica Center for Retirement Studies, only 6% of actual retirees report working in retirement as a source of income.

Whether you work is not always up to you. Three out of five retirees left the workforce earlier than planned, according to Transamerica. Of those, 66% did so because of employment-related issues, including organizational changes at their companies, losing their jobs and taking buyouts. Health-related issues—either their own ill health or that of a loved one—was cited by 37%.

The actionable advice: Assume the worst, and save early and often.

Putting off saving for retirement

The single biggest financial regret of Americans surveyed by Bankrate was waiting too long to start saving for retirement. Not surprisingly, respondents 50 and older expressed this regret at a much higher rate than younger respondents.

“Many people do not start to aggressively save for retirement until they reach their 40s or 50s,’’ says Ajay Kaisth, a certified financial planner with KAI Advisors in Princeton Junction, N.J. “The good news for these investors is that they may still have enough time to change their savings behavior and achieve their goals, but they will need to take action quickly and be extremely disciplined about their savings.”

Morningstar calculated how much you need to sock away monthly to reach the magic number of $1 million saved by age 65. Assuming a 7% annual rate of return, you’d need to save $381 a month if you start at age 25; $820 monthly, starting at 35; $1,920, starting at 45; and $5,778, starting at 55.

Uncle Sam offers incentives to procrastinators. Once you turn 50, you can start making catch-up contributions to your retirement accounts. In 2016, that means older savers can contribute an extra $6,000 to a 401(k) on top of the standard $18,000. The catch-up amount for IRAs is $1,000 on top of the standard $5,500.

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How Much Will Your Health Expenses Be In Retirement?

Cost-of-careMy Comments: Having access to medical care is a big deal. Having access to medical care that you can afford is a big deal. And it becomes a bigger deal when you are no longer employed and attempting to live the rest of your life with some degree of financial freedom.

By Glenn Ruffenach July 15, 2016

Question: My wife and I are trying to set up a budget for retirement, and we’re wrestling, in particular, with health-care expenses. How can we estimate what our medical bills will look like in the future?

An important — and vexing — question. For instance, a healthy person will have fewer and/or smaller medical bills in later life, right? Well…maybe not. As a recent study, “An Apple a Day: The Impact of Health Conditions on the Required Savings” noted, “Excellent health, ironically, can actually raise an individual’s lifetime health spending needs because of the likelihood that healthy 65-year-olds will live much longer.”

A good starting point (and a study worth reading in full) is the “2015 Retirement Health Care Costs Data Report” from HealthView Services Inc., a provider of health-care planning tools in Danvers, Mass. According to HealthView, a healthy 65-year-old couple can expect to pay, on average, $266,589 for insurance premiums and $128,365 for related expenses (dental, vision, copays and out-of-pocket bills) over their lifetime.

Another good resource—one with an emphasis on prescription-drug costs—is “Amount of Savings Needed for Health Expenses for People Eligible for Medicare” from the Employee Benefit Research Institute in Washington. The study estimates that a couple, where both spouses have median drug expenses, would need $259,000 to have a 90% chance of having enough money to cover health-care bills in retirement.

Note: Neither report accounts for possible long-term-care expenses. For that piece of the puzzle, check out Genworth Financial’s GNW, +2.72% 2016 “Cost of Care Survey.”

I am due to begin required withdrawals from my retirement savings. What are the advantages and disadvantages of an annual lump-sum withdrawal as opposed to a monthly payout?

In most cases, a required minimum distribution, or RMD, in the form of a single annual payout causes fewer problems — if you have a good amount of self-discipline.

Yes, monthly withdrawals act like a regular paycheck. But, to take a worst-case scenario, if you die midyear, your family must withdraw the remaining RMD, says Carolyn McClanahan, founder of Life Planning Partners Inc. in Jacksonville, Fla. Figuring out how much has already been withdrawn and how much remains to be withdrawn can (at times) be a hassle.

With a single lump sum, you can deposit the funds in a savings account and then arrange for monthly transfers to your checking account, creating (in effect) a regular paycheck. And if you wait until November or December to take an RMD — when you have a clear picture of all your income for that year — you can calculate your tax withholding on the withdrawal more accurately.

The one cautionary note about a single annual withdrawal: willpower, or the lack thereof. “Some people spend it all at once if they take it as a lump sum,” McClanahan says.

I have a question about paying my grandchildren’s tuition. I understand that if I pay the institution directly there is no tax consequence for my grandchild or me. Does this apply only to tuition or does it include room and board?

The answer: just tuition. But you have some flexibility here.

To start, the “tax consequence,” in this case, is the federal gift tax. You can give as much as $14,000 in cash or other assets to as many people as you wish each year, and those gifts won’t count against your (the giver’s) lifetime exemption. (In all, you can give away $5.45 million before gift taxes kick in.) If you exceed the $14,000 ceiling in a given year, you have to file a gift-tax return. That said, there are exceptions to these rules.

Under section 2503(e)(2) of the Tax Code, “any amount paid on behalf of an individual as tuition to an educational organization” is exempt from gift taxes. Note the wording: “tuition.” Period. There’s no mention of associated costs, like books, room and board, etc.

This shouldn’t stop you, however, from paying the grandchild’s tuition — and then either gifting him $14,000 to pay room and board, or paying room and board up to $14,000 directly, says Barry Kaplan, chief investment officer at Cambridge Wealth Counsel in Atlanta. And if both grandparents are alive, each can gift $14,000, for a total of $28,000.

My husband started taking Social Security at his full retirement age, but continued to work. He is now 75 and still working full time. Over the past 10 years, his benefit has gradually increased because of cost-of-living adjustments and his continuing contributions (via his paychecks) to Social Security. I am nearing full retirement age and am trying to figure out how much I would receive as a spousal benefit. I know that — at my full retirement age — I can qualify for half of my husband’s benefit. But do I get half of what he started receiving 10 years ago, or half of what he is receiving now, including the adjustments to his benefit?

Your spousal benefit would be based on your husband’s current payout, including the cost-of-living adjustments and any increases tied to his continued wages. To get a better idea of how much the spousal benefit will be, says Darren Lutz, a public affairs specialist with the Social Security Administration, your husband can create a “my Social Security” account at socialsecurity.gov/myaccount to see what his full benefit is, before deductions for Medicare premiums, etc. Then you can visit the agency’s retirement planner for spouses to learn more about potential benefits.

Glenn Ruffenach is a former reporter and editor for The Wall Street Journal, and co-author of “The Wall Street Journal Complete Retirement Guidebook.” Email your questions and comments to askencore@wsj.com.

11 Medicare Mistakes to Avoid

healthcare reformMy Comments: If you are 65 and older, Medicare is fantastic. Okay, it has its limitations, but coupled with what is known as a MediGap or MedSup plan, it’s fantastic.

You can argue all you want about how this country is slowly sinking into a socialist morass, but when you reach my age, health issues surface almost weekly, not annually. Being able to seek advice from medical professionals without first thinking how it might break the bank, is a huge component of financial freedom. HUGE, I say.

July 18, 2016 By Ginger Szala

First, let’s generally define the Parts of Medicare. Part A, referred to as original Medicare, focuses on hospital coverage. Part B is medical coverage. Part C (also called Medicare Advantage) is a different way of putting Parts A and B into one plan, offered by private companies. Part D is prescription drug coverage.

The rules of Medicare are complicated and laden with deadlines that are costly to miss. Via Kiplinger, here are 11 common Medicare mistakes to avoid:

1. Not reviewing your Part D Plan annually
Medicare Part D is a headache for many to keep on top of. But remember these key points:
• Open enrollment runs from Oct. 15 to Dec. 7 every year.
• During open enrollment it’s essential to review options because there might be changes to your current plan, meaning your cost and coverage would vary. Be leery of plans that increase premiums, increase your percentage of cost for drugs, or other requirements, like having to use a specific pharmacy, to be covered.
• Make sure you check if any drugs you’re on have gone generic, as you might get a nice price reduction.
• Medicare also helps you to compare plans. Check out the various links on Medicare.gov or AARP.org for more information, guidance and price comparison tools.

2. Picking the same Part D plan as your spouse
Not all Part D plans are alike, and just because a plan works for you it might not be the same for your spouse, who may be taking different prescriptions. Use the Medicare Plan Finder to determine your out-of-pocket costs on each plan. Also keep in mind that some plans require the use of specific pharmacies.

3. Going out of network on private Medicare Advantage plans
If using private Medicare Advantage plans, similar to PPOs or HMOs, you’ll need to utilize the network of doctors and hospitals within the plan to get the lowest co-payments. Be wary that if you go out of network, there may be no coverage at all.

4. Not knowing how to switch Medicare Advantage plans anytime if needed
Even outside the annual open enrollment period, it’s possible to switch plans for life-changing events, like moving to a place that isn’t in your current plan’s geographical coverage. And if you’re in the five-star plan, you can make a switch any time during the year. Also, from Jan. 1 to Feb. 15, you may be able to switch from Medicare Advantage to traditional Medicare plus Part D prescription-drug plan.

5. Not considering Medigap within 6 months
Once enrolling in Medicare Part B, you have six months to buy any Medicare supplement plan in your area even if you have pre-existing conditions (and at age 65, who doesn’t?). But after six months, insurers can reject you or charge more depending on your health. It depends on your state rules and insurer’s policies. Check at Medicare.gov for your options.

6. Not opting for Medicare when you turn 65 (most of the time)

Forever young, so who needs Medicare? Well, you’re smart to take advantage of what the government is giving you, often for free. If you are getting Social Security already when you turn 65, you’ll automatically be enrolled in Medicare Part A and Part B. But if you aren’t receiving Social Security benefits, you’ll have to act on your own to sign up. There are reasons to delay: for example, you or your spouse have a full-time job and already get health care coverage as a part of that. Be aware that if you aren’t collecting Social Security benefits, there’s a seven-month period to sign up for Medicare, which runs from three months before the month you turn 65 to three months after.

7. Not signing up for Part B if you have retiree or COBRA coverage
Again, there are many tricky steps in the Medicare signup game. Unless you or your spouse are receiving insurance through a current employer (who has 20 or more employees), Medicare is considered your main health insurance coverage. Retiree coverage, COBRA or severance benefits are NOT primary, and if you don’t sign up for Medicare, you might have gaps in coverage and be late on your Part B premium. So pay attention.

8. Missing the Part B enrollment deadline after leaving your job

It’s an alphabet jungle out there, but this one is easy: if you still have insurance through a job when you turn 65, that’s fine. You don’t need to worry about Part B premiums. But within eight months of leaving your job, you need to sign up or you might have to wait for the next enrollment period, meaning a gap in coverage. Then there is also the possibility of a 10% lifetime late-enrollment penalty.

9. Ignoring income thresholds
Most people pay the minimum of $140.90 a month for Part B premiums and $12.30 per month for Part D. This goes higher depending on your adjusted gross income. So if you are bringing in more than $85,000, that Part B premium could more than double per month, where as Part D could jump fivefold. Be mindful when you are withdrawing from tax-deferred accounts that you don’t go over the income threshold if possible.

10. Not fighting surcharge changes for the year you retire
The Social Security Administration uses your tax returns from the most recent two years to determine if you are subject to an income surcharge, that is you are making more than $85,000 a year. But you can protest it if you prove life-changing events, such as divorce, death of a spouse or retirement.

11. Not minding your HSA contributions

You can’t contribute to HSAs if you are getting Medicare, but if you or your spouse have health insurance through a job (with 20 or more employees) and haven’t applied for Medicare or Social Security benefits, you still can continue to add to your HSA. That said, be careful about contributions in the year you leave your job and sign up for Medicare, as your HSA must be prorated by number of months on Medicare.