“The biggest question people have is, ‘is my money going to last?’” said Michelle Kohoutek, Sales Executive with Avera Health Plans. “At retirement, income changes, but so do expenses. You need to figure out how to balance your new financial situation.”
After your paycheck ends, income might come from sources like Social Security, pensions, retirement plans, IRA withdrawals, investments, or even a part-time job.
Expenses might change as you downsize to a smaller home, perhaps eliminate a car payment, and go on Medicare. Getting your house paid off before you reach this stage in life puts you miles ahead.
Make sure you’re covered
“Health insurance is a huge part of that financial picture,” Kohoutek said.
Even if you decide to retire early, you’re not eligible for Medicare until age 65. “So you need to figure out your health insurance coverage during those years,” Kohoutek said. Options include COBRA and the Health Insurance Marketplace.
Typically, Medicare premiums are much less than group health insurance. Also, Medicare has no cap or out-of-pocket maximum. A Medicare Supplement Insurance, or Medigap, policy covers those gaps that can put your assets at risk.
Even with both Medicare and supplement premiums, most people end up paying less for health coverage.
“It’s not complicated, it’s just different. When people figure it out, they’re happy with it,” Kohoutek said. “It’s important to find a trusted agent to help walk you through it. At first, all the different timelines and terminology can seem confusing.”
It’s to your advantage to shop for Medicare Supplement Insurance at the right time. Six months before or after your Medicare Part B becomes effective is your own personal open enrollment period for Medigap policies. In other words, you can’t be turned down for a pre-existing condition.
Open enrollment for Medigap plans
From Sept. 1 to Feb. 15, Avera Health Plans offers a guarantee issue/open enrollment for Medigap plans. This period is offered for people who feel “stuck” in their plan, or fear they will be turned down due to a health issue. This is not a government-mandated period, and is only offered by Avera Health Plans.
Retirement is also a time to consider other benefits that you might have had with your employer, such as life insurance, dental and vision coverage.
“People who start making these connections at least a year in advance are on top of it. They benefit from the peace of mind that it’s taken care of,” Kohoutek added.
Thinking of retirement?
Important age milestones to remember…
- Age 62: Earliest age you can start taking Social Security in most cases
- Age 65-67: Social Security full retirement age (depends on your birth date)
- Age 65: Medicare eligibility in most cases
- Six months before or after your Medicare Part B effective date: Guarantee issue Medigap enrollment period
- Age 70: Age through which you can continue contributing to Social Security if you’re still working
- Sept. 1-Feb. 15: Avera Health Plans guarantee issue/open enrollment for Medicare Supplement Insurance. No health questions are asked when you enroll at this time.
- Oct. 15-Dec. 7: Medicare open enrollment, when you can change your Medicare plan or prescription drug coverage
- Nov. 1-Jan. 31: Health Insurance Marketplace open enrollment for individual and family plans.