Having an updated estate plan is an important step for individuals at any stage of their life; however, later in life, there are additional concerns that should also be addressed and planned for to make for a smooth transition into retirement age and beyond.
Retirement. It is important throughout your career to discuss your retirement plan with your financial advisor to ensure you are on the right track to retire comfortably at your goal age with sufficient assets to maintain your standard of living. You should outline your needs in retirement early on and make sure your savings plan is sufficient to meet those needs.
Social Security Benefits. You are eligible to claim Social Security benefits at the age of 62. However, if you choose to claim benefits at age 62, your benefit will be approximately 25% lower than it would be if you had waited until age 66, full retirement age. If you wait even longer, by age 70 your benefit would be approximately 32% higher.
There are additional options for claiming benefits if you are married. You may be able to claim spousal benefits before claiming your own benefits, delaying the age at which you claim and increasing your benefit amount.
The rules and strategies for claiming Social Security benefits are complex; it is important to review all of your options and make a plan that can maximize your benefits and fit your specific needs.
Medicare. At age 65, you become eligible to enroll in Medicare Part B, which covers outpatient medical services. Your initial enrollment period begins three months before you turn 65 and ends three months after. If you’re still working, you may delay enrollment and continue under your employer’s health care plan. However, once you retire, you must enroll in Medicare Part B within eight months of your retirement, regardless of whether you continue to be covered by your employer’s health care plan.
There are additional programs that supplement Medicare that may be advantageous to you, such as Medicare Advantage or Medigap policies. These supplemental plans are numerous and can be confusing; it is important to research the plan that will best fit your needs.
Housing. While your two-story house with basement laundry and a large yard may fit your needs now, will it be the best option for you later in life? As you get older, you may not want to spend your free time doing yard work or shoveling snow, and navigating two sets of stairs may not be as easy as it once was.
Long-Term Care. Many people fail to plan for long-term care, assuming they won’t need it. However, with the monthly cost of nursing care averaging $6,000 and up, it is important to think about how you would cover that cost if the need arises. Long-term care is typically paid for through long-term care insurance, income and savings, which most people cannot afford, or Medicaid, if you become destitute.
Long-term care insurance can be costly and may not be appropriate for everyone, but the high cost of nursing care can quickly deplete your savings. Medicaid is available for individuals who do not have the means to pay for the nursing care themselves; to be eligible, you must have less than $2,000.00 in assets and your income must be below a certain level. There are planning strategies that can help protect your assets while still qualifying for Medicaid, but these strategies are best implemented before the need for nursing care arises.
While having a Will, Trust, and Powers of Attorney is an important step in planning for later in life, there are many other issues that should also be addressed. Early planning can be the key to maximizing benefits and ensuring you are prepared for retirement and beyond.