Getting the most out of your retirement benefits isn't as complicated as many may think. While it is true that every seniors situation is unique to themselves and their spouses, maximizing your benefits to ensure you get the best possibly outcome isn't. If you follow these simple steps when it comes to Medicare and Social Security then you have the potential to get the most out of the benefits that you have earned.
Medicare is the government funded healthcare system for Americans who are 65 and older. Seniors can sign up as early as three months before you turn 65 if you want your coverage to begin the day you turn 65. You will then have the month of your birthday and the three months after (a total of seven months) to sign up for coverage. If you do not sign up within that time frame then you will have to wait for the Medicare open-enrollment period which lasts from January 1–March 31 and your coverage would begin on July 1 of that year.
Seniors have a few options when signing up for Medicare. They can either sign up for traditional Medicare, which is also called Medicare A and B, or they can sign up for Medicare Advantage, or Medicare Part C. There is also the prescription drug program, or Medicare Part D that seniors have the option of enrolling in.
Medicare Part A is your traditional hospital and home health care insurance and Part B covers other services like doctors visits, ambulance services, mental health services, among others. If you enroll in Medicare Part A and B then you can go to any hospital in the country that accepts Medicare patients. There is no monthly premium for Medicare Part A, but there is a monthly premium for Medicare Part B, which is currently $134.00/month.
Medicare Advantage, or Medicare Part C, are private health insurance plans that are administered by health insurance companies. These plans must offer the same services that traditional Medicare offers, outside of hospice services, and most offer additional services that are not covered in traditional Medicare. Another thing that's important to understand with Medicare Part C is that your choice of doctors and hospitals is more restricted than it is with traditional Medicare.
I am not here to suggest that one plan is better than the other and each individual needs to make their own decisions based on their own specific needs and financial situation.
Social Security is an entirely different program and when you should begin drawing your benefits will depend largely on your current and future financial situation. The earliest you can begin drawing your benefits is at age 62, but it is important to know that you will only be getting 75% of your total benefits if you begin drawing that early. If you are able to hold off on drawing your benefits until you turn 70 then you will be eligible to receive 100 percent of your total benefits.
If you can't imagine waiting until your 70 or if your financial situation wouldn't necessarily allow you to wait that long then consider holding off as long as you can. Each year you hold off on drawing your benefits the lower the early drawing penalty will be.
Another important thing to keep in mind if you are going to keep working even after you begin drawing your benefits is that you can be charged a penalty if you wind up making too much money. The Social Security Administration allows you to earn an extra $15,720 in income each year on top of your benefits, but if you make more than that then you will be docked $1 for every $2 of your benefits. So if you plan on working while your drawing benefits then make sure you keep that in mind.
As you can see, maximizing your retirement benefits doesn't have to be as difficult as it sounds. Choosing the right Medicare plan and drawing your Social Security benefits at the right time can really go a long way towards ensuring financial stability well into your retirement years