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-- Programs and Services -- Contact Information Planning for retirement
There are many factors that go into making the decision when to retire, and not all of retirement planning is financial. People need to think about their attitudes toward work, leisure, risk, and reward: if they need to be busy, need structure imposed on their life so they don’t become sedentary. Others have a list of “to do’s” they have been waiting to have the free time for. So how do you go about making the decision?
What type of person are you?
First decide at what age you want to retire and whether you have enough financial resources to make that a reality. If up until now you have not established a retirement account or have no access to a company pension, you might consider working part-time after retirement. The plus side is part-time employment is a great way to “ease into” the idea of leaving the workforce permanently, and can offer an opportunity to work in a new area about which you’ve always been fascinated.
Contact Social Security
The first step in exploring your decision is to make contact with your local Social Security office. Offices in Berkshire County are: Pittsfield (413-499-2432) - 78 Center Street, Conte Federal Building, and in North County (413-664-795) - 37 Main Street in North Adams. Assuming that you are not disabled, you can start collecting Social Security at age 62. However, your benefits will then be reduced for the entire length of your retirement. The age that you can collect full benefits varies according to the year that you were born:
1937 or earlier - Age 65
1938 - Age 65 and 2 months
1939 - Age 65 and 4 months
1940 - Age 65 and 6 months
1941 - Age 65 and 8 months
1942 - Age 65 and 10 months
1943 -1954 - Age 66.
Should you wait?
An important new change to the law is that individuals who wait for full retirement age are entitled to both collect Social Security benefits and continue to work with no reduction in benefits. Collecting between age 62 and full retirement age means that your Social Security benefits are potentially reduced based on the amount of your supplemental earned income.
The decision to wait to collect at full retirement age might depend on your health status, access to other financial resources, and the health of your spouse. What is most important in this process is to weigh the risk and reward – will waiting another three or four years endanger your health? Will you be able to live on a reduced income if you live into your 80s or 90s?
Some individuals who are reluctant to retire or who have Social Security as a small part of their retirement package might wait until age 70 to collect the maximum monthly benefit. Consult your financial advisor to discuss your best option.
Medicare
Many are unaware that the age at which you are eligible for Medicare is not dependent on or affected by the age you start collecting Social Security (again assuming that the individual is not disabled). Those who collect early retirement benefits will still need to arrange for personal health insurance until they reach age 65. Sometimes their insurance is through a spouse’s employment and at other times is paid for privately. Conversely, individuals who delay retirement past 65 should still notify Social Security within three months of their 65th birthday to access their Medicare Part A benefits, which are fully paid for.
Medicare Part B- SHINE Counselors
At this time, most people simultaneously sign up for Part B, and in fact, if you do not indicate you aren’t interested, it will be deducted automatically from your Social Security check. But if an individual is covered by employer insurance they can delay taking Part B. (This will also apply to the new Medicare D benefit which takes effect in January 2006.) Be sure that the plan that covers you allows you to postpone Part B. An employee retirement insurance plan does not qualify for this exception. However, if you decide to begin working again, a new employer’s health insurance would let you suspend Part B during the period when you are employed. Call Elder Services at 1-800-957-3557, or your local Council on Aging, and ask to speak to a SHINE (Serving Health Information Needs of Elders) counselor for questions regarding Medicare.
Supplemental insurance
Medicare is an excellent system for almost universal coverage for all individuals 65 and over; however, there are gaps in the coverage, which a supplemental insurance policy can help cover. The choice of supplemental insurance and the benefits that are needed is a highly individualized decision. It is recommended that those considering the purchase of supplemental insurance have a conversation with a SHINE counselor before making their decision.
Prescription Advantage
Often individuals are more concerned about prescription drug coverage than they are about hospital insurance. All individuals in Massachusetts may join Prescription Advantage, the state prescription insurance plan, between their 65th and 66th birthdays. Again, a conversation with a SHINE counselor can often help you sort out your options.
Company pensions
Individuals with access to company pensions need to contact their human resources department to investigate what the rules are for accessing benefits. If you have been contributing to an IRA or 401 K program, you need to ask at what age you may begin withdrawing from the account and at what age you must withdraw funds.
Your dreams
Keep in mind that retirement is not all about money. It’s also about your hopes and dreams of what retirement can be. Would you like to volunteer in the community? Are there places in the U.S. or around the world that you’ve always wanted to visit? Are there grandchildren and family members who need or want your attention? In most cases, we will never be any younger or healthier than we are today; an opportunity postponed may be an opportunity lost.
Retirement can be a real reward for a life of hard work and responsibility. But the key to being able to relax and enjoy your retirement is the ability to look ahead and anticipate your needs.