September 10, 2022 | Posted in:

Medicare and Social Security – A Financial Calendar

If you are nearing your 60s, one of the most important financial decisions of your lifetime is when to take Social Security benefits. It’s complex depending on your income, your spouse’s income, the number of years you worked, whether or not you plan to continue working, your health and family longevity.


Less involved is when and how to sign up for Medicare. We’ll start there.


Medicare timing

Most people start Medicare when they turn 65. In some cases, if you are covered by an employer health plan, it might make sense to delay signing up for some Medicare benefits—specifically part B.


Medicare has a 7-month enrollment period – three months before and after your 65th birthday, and your birthday month. There are two parts to Medicare: part A for hospitalization, which has no premiums, and part B for doctor and outpatient visits, which has monthly premiums that are automatically deducted from Social Security. Many also sign up for Part D to cover the cost of prescription drugs. There is also supplemental insurance to pay for dental, vision, hearing and fitness.


Social Security timing

There are three basic options for Social Security benefit timing – early, full and delayed retirement. You can start taking benefits as early as age 62. Full retirement timing depends on the year you were born. You can also delay retirement and get a higher benefit the longer you delay it, up until age 70.


In this example from the Social Security Administration for someone who is age 62 in 2022, taking early retirement would reduce monthly benefits by 30% from full retirement age. On the other hand, delaying retirement until age 70 would increase benefits 77% from early retirement. The difference in this example is $540 each month.

Social Security Benefits vs. Age Chart


You might be surprised to learn that many people live much longer than the average retiree. In fact, the Social Security Administration reports that one out of every three 65-year-olds today will live until at least age 90, and one out of seven will live until at least age 95.


Complicating the decision is the difference in tax treatment of Social Security income vs. IRA withdrawals, your other sources of retirement income and coordination of spousal benefits. Three key questions to ask:  (1) How much do you need the money? (2) Will your spouse depend on your Social Security benefits? (3) How healthy are you?


By determining your priorities and other income opportunities, you may be able to better decide at what age benefits make the most sense. Talk to your financial advisor and visit for more information.


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