By SYLVIA GORDON
Guest Columnist
Editor’s note: This is the first in a series of columns from Sylvia Gordon, who is the president of Gordon Marketing, headquartered in Noblesville, where she trains on Medicare and Social Security in all 50 states. You can contact her at sgordon@gordonmarketing.com.
For decades, the retirement age was commonly thought of as age 65. Over 30 years ago, during the Reagan Administration, the age to receive full Social Security benefits was raised from 65 gradually to 67, but most Americans still think it is 65.
Do a quick Google search and you can find your Full Retirement Age (FRA). If you were born in 1956, your full retirement age is 66 and four months. It goes up in two-month increments. Everyone born in 1960 or thereafter will reach their FRA at 67.
You can choose to take Social Security as early as 62, but you can’t choose to take Medicare early. Medicare still begins at age 65. The only people who get it earlier are on Social Security Disability.
Many people know they can “retire early” and gleefully quit their job. They sign up for Social Security at 62 and then they call to get their Medicare started. Only to find out that they must purchase an Affordable Health Act plan. These plans average $500 to $1,000 per month or more, depending on which plan you choose and where you live. Since the average American collects about $1,500 per month in Social Security, paying one-third of it or more for health insurance is not going to work, and they quickly call for a SOS.
Luckily, you can withdraw your application for Social Security as long as you haven’t been on it over 12 months. You must pay it all back, but then your Social Security will continue to grow until you decide to retire again.
While you can choose to retire anytime from age 62 on, there is no benefit to waiting past age 70.
Medicare, on the other hand, has strict late penalties if you don’t enroll when you are first eligible. For most people, that is at age 65. That age hasn’t changed from when it was established in 1966. More and more Americans, however, are choosing to work past age 65 and delay Medicare. There is no penalty if you are still on a group health plan from work as long as the group has at least 20 people on it. But if you are self-employed or in a small group, you must take Medicare at age 65 or face a 10 percent penalty per year that you delay. That penalty never expires!
You could stop working at 68 and take Medicare but delay Social Security till age 70. You might be on your spouse’s health plan and not working yourself. You could take Social Security at 62 and delay Medicare until your spouse stops working. Or many different combinations of the two.
There is no right time to retire. It’s a very individual decision, and 65 is often not the magic number.