For most people, reaching retirement age is accompanied by a significant drop in income. This is especially true if they are retired from the workforce. However, retirement doesn’t have to mean experiencing poverty and deprivation. Through a variety of strategies, it is possible to enjoy retirement, with at least some resources for travel, cultural activities or spending time with friends and loved ones. One important aspect of making retirement dollars stretch further is by claiming benefits such as Social Security and Medicare. Another is to reduce housing expenses.
Develop a Budget for Retirement
Many people associate the word budget with deprivation. This is unfortunate because a budget that is properly developed and administered allows individuals and households to better meet their obligations and have more money to devote to discretionary spending. Once a budget has been developed, it’s possible to identify areas where spending cuts can be made with minimal detrimental impact.
Register for Medicare and Social Security
Two of the most important resources for seniors in this country are Social Security and Medicare. Many experts recommend waiting until reaching the full retirement age of either 66 or 67, or even waiting until age 70 if possible, to start receiving these benefits. For seniors who are still working, waiting to collect benefits often makes sense. However, seniors are allowed to begin claiming Social Security benefits as early as age 62 if they are not working and the need for income is dire. It is possible to initiate the application process online through the Social Security website.
Eligibility for Medicare for seniors begins at age 65. Unlike Social Security, there is no advantage to waiting to submit a Medicare application. In fact, if seniors do not apply within their initial seven-month enrollment period (three months before the month they turn 65, their birthday month, and the following three months) they must wait until the next enrollment period to obtain Medicare. In the meantime, penalties may accrue and they may even suffer benefit losses.
All eligible seniors may enroll in original Medicare, which consists of Part A (hospital coverage) and Part B (medical care). However, vision, dental, and prescription drug coverage are not included in the original Medicare. To obtain coverage for those areas, individuals must either choose a Medicare Advantage plan, also known as Part C, or a Medicare prescription drug plan, also known as Part D. These plans are administered by third-party insurers that have been approved by Medicare. While Medicare Advantage plans often include vision and dental coverage, Part D does not.
Consider House Sharing
Many seniors downsize from family homes into apartments, condos, or assisted living facilities. However, house sharing represents an alternative to moving away from a home that the person may still love. One house-sharing option is to seek out other seniors in an arrangement much like the TV show “The Golden Girls.” Another option is to rent out a room to a younger person, who may or may not assist with household chores. Either arrangement provides a measure of security. Since there is at least one other person in the house, an accident such as a fall is more likely to be discovered in time to obtain help.
Remaining Financially Sound in Retirement
Retirement often represents a significant reduction in income, but it does not have to mean drastic cuts in lifestyle. Making a budget may seem like a chore, but a well-designed budget often identifies areas where cuts can be made with minimal pain. Some lifestyle adjustments, such as house sharing, not only save money but also provide a source of companionship and security for seniors who would otherwise be alone in their homes.
It is also important for seniors facing retirement to claim the benefits they have earned through Social Security and Medicare. While some seniors may opt to delay collecting Social Security, it is possible to begin collecting benefits as early as age 62. On the other hand, there is no reason to delay submitting a Medicare application upon reaching age 65. By attending to these important areas, seniors can enjoy their retirement with peace of mind.