What Boomers Wish They Knew About Money Before Turning 70
Boomers hitting 70 this year were born the same year Elvis released "Heartbreak Hotel" and gas was about 22 cents a gallon. They may also be past the point of no return regarding a number of important financial decisions that should have ideally been made when they were in their 60s.
Most financial regrets for 70-year-olds relate to timing choices for Social Security, Medicare, and long-term care, not overspending or bad stock picks. Here's what boomers wish they knew about money before turning 70.
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Social Security Is a One-Shot Deal
For anyone born in 1960 or later, full retirement age is 67. But you can file as early as 62 or as late as 70. Choosing when you want to claim benefits is one of the most important financial decisions a 60-something can make, and there are no do-overs. Once you make your selection, you’re locked into it for the rest of your life.
If you file early, at age 62, you can get an additional eight years of benefit checks vs. if you had waited until age 70. The downside is that your payout will be permanently reduced by 30%, according to the Social Security Administration. If you’re married, that reduction won’t just affect you. If your spouse claims benefits based on your earnings record, their payout will be reduced by the same 30% as well. This is also true of the survivor’s benefit, which kicks in after you pass away.
There are certainly arguments both ways as to when you should file for Social Security, and it’s an individual decision. But workers have slowly begun to defer their benefits to get bigger lifelong checks. SSA data shows the typical retired worker's claiming age climbed from 63.6 to roughly 64.7 between 2008 and 2018 alone.
While waiting to file past 62 can feel like leaving money on the table to some, others may see higher lifelong benefits by waiting. Either way, each filer needs to understand that they only get one crack at making the right decision.
Medicare’s Enrollment Window Is Tight
One of the big benefits of turning 65 is that you become eligible for Medicare. But there’s only a seven-month window in which you can sign up for Medicare Part B. If you miss it, the penalty isn’t a one-time fee. Instead, it’s baked into your premium for as long as you have Part B.
According to Medicare.gov, the penalty adds an extra 10% for every full year you could have signed up but didn't. If you wait two years to sign up, the penalty doubles, to 20%. Wait five and the penalty jumps to 50%, every month, forever.
Long-Term Care Is More Likely Than You Think
Many Americans underestimate how likely they are to need long-term care. Unfortunately, according to the U.S. Department of Health and Human Services' Administration for Community Living, someone turning 65 today has close to a 70% chance of needing some form of long-term care in their remaining years. Women need it for an average of 3.7 years; men, 2.2 years.
While this means that nearly one-third of today's 65-year-olds will never need it at all, one in five will need it for more than five years. Guessing wrong here can be an expensive mistake. If you end up needing years of high-cost, long-term care, all the planning you did for groceries, travel, and other retirement expenses will have to be cut.
If you’re approaching 70, that’s essentially your last chance to consider some of these life-changing financial decisions. Ideally, you’ll make them months or years in advance. Otherwise, you risk missing some important windows.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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