Retiring at 65 and the Decisions You'll Need to Make

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It is fairly common for Americans to retire at age 65. Some people will wait longer, whether because they can't afford to retire yet or simply want to continue working. But for many people, 65 is an age that makes sense to retire because that's when they can start using Medicare.

Joining Medicare isn't the only thing you'll need to do at 65, though. Here are five choices you'll need to make if you want to stop working at 65.

Key Takeaways

  • If you retire at 65, starting your Medicare health coverage isn't the only thing you'll need to do.
  • You'll also need to decide when you want to start Social Security and figure out whether it makes sense to consolidate your retirement accounts.
  • This is also a good time to choose when you want to start taking withdrawals from your IRAs.
  • When making choices about money and retirement, it may be a good idea to get advice from a professional.

What Will You Do For Health Care?

Choosing a health insurance plan is one of the biggest decisions you'll need to make at 65, whether you retire or not. Medicare benefits begin at 65 for most people. This makes it simpler to retire at 65 than at age 60 or 62

Medicare won't cover all your health care costs, though. As a plan, it has many costs that you will be responsible for paying on your own. For example, an inpatient hospital stay has a $1,484 deductible per benefit period in 2021. And you can have more than one benefit period in a year.

To make up for these gaps, many retirees buy a Medicare Supplement (also called a Medigap policy) or a Medicare Advantage plan. A Medicare Supplement plan pays after Medicare, while a Medicare Advantage plan pays instead of Medicare.

You may not need one of these plans if you have retirement health insurance or insurance through a working spouse.

As well as your basic health care plan, you'll also want to think about how you will handle long-term care costs. These can pile up as you age or have more health problems, and they aren't covered by most health care plans.

Long-term care isn't just about medical care. It includes needing help with daily living. As you get older, you might need someone to help with cleaning, cooking, bathing, and dressing.

Many people need this type of help as they age. You can either apply for a long-term care insurance policy or pay for this kind of help from your savings as you need it.


If you have lower income and fewer assets, you may be able to get Medicaid, which helps pay for long-term care services.

Will You Start Social Security Now or Later?

Take some time to compare starting your Social Security payments at 65 versus waiting a few more years. Your full retirement age (FRA) is going to be age 66 or later. If you start getting payments before your FRA, you'll receive a reduced benefit.

If you wait to retire until after your FRA, you'll receive a higher benefit. How much you get will increase the longer you wait. At age 70, the increase stops, so this is the latest you should hold off on starting your Social Security retirement benefits.

Whether it's worthwhile to wait depends on your own finances. One thing to think about is that if you're married, this higher benefit amount becomes the survivor benefit. This can turn into a form of life insurance for the spouse who lives longer.

Should You Consolidate IRAs?

If you have money in a retirement plan like a 401(k), you’ll need to decide if you should roll this money over to an IRA.

It's simpler to manage your savings if you consolidate all your retirement accounts into one IRA account. If you decide to go this route, you'll need to decide what bank, credit union, or other financial institution to use. You can also hire a financial advisor to help you out.

IRA accounts must be maintained under separate names. This means you can't combine your retirement accounts with your spouse's or partner's accounts.

However, you can make sure you name each other as the beneficiary of the accounts. That way, you will inherit each other's accounts when the other partner passes away.

Should You Take Withdrawals Now or Later?

The IRS rules state that you must start taking distributions from IRAs and other qualified retirement plans no later than age 72. These are called Required Minimum Distributions, or RMDs.

You can withdraw funds before this age. For tax reasons, sometimes it makes sense to do so. If you delay Social Security and/or have a spouse younger than you, there are often big tax planning opportunities that exist between ages 65 and 70.

If your taxable income is low during these years, taking money out of your IRA might make sense. This could even help you save on taxes in the long run.

You may want to have your accountant, tax preparer, or retirement planner run a multi-year tax projection for you. This can help you see when it makes the most sense to start taking withdrawals.

Do You Need Professional Advice?

Many people choose to hire a financial planner or investment adviser when they're planning for retirement.

In many cases, an independent retirement planner can help you lower your taxes during retirement, and advise on when you should begin Social Security benefits. They can also show you how your savings can create income even after you retire.

If you are thinking about investments like annuities or financial products like a reverse mortgage, talk to an advisor first. They will be able to help you make the best choice to raise your income, lower your taxes, and live your retirement years in the most comfort you can.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. "Medicare Costs at a Glance."

  2. American Council on Aging. "Answers to All of Your Questions About Medicaid Long Term Care."

  3. Social Security Administration. "Retirement Benefits," Page 4-5.

  4. IRS. "Retirement Topics—Required Minimum Distributions (RMDs)."

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