7 Steps to a Happy Retirement

You wouldn’t dream of running a marathon without undergoing months of training. Or heading into the wilderness without making sure you have adequate provisions. Or betting your life savings on a business venture you haven’t thoroughly researched.

But when it comes to entering retirement—when a failure to plan can have devastating consequences—a surprising number of people are unprepared. More than half of workers older than 55 haven’t developed a plan for paying themselves in retirement, according to a recent study by Ameriprise, and almost two-thirds haven’t identified which investments they’ll tap first. Many wait until they’ve set their retirement date to put together any kind of plan at all.

Planning late is better than never planning, but your chances of a secure retirement will improve if you start making decisions and checking items off your to-do list at least a year out. Take a look at seven big issues you’ll face as you transition into retirement.

Sign Up for Medicare

You can’t ignore signing up for Medicare. You’re eligible at age 65, and you can sign up without penalty anytime from three months before until three months after the month of your 65th birthday. Medicare Part A covers hospitalization and is premium-free, so there’s generally no reason not to sign up as soon as you’re eligible. One exception: You can’t contribute to a health savings account if you enroll in Medicare. If you have an HSA and want to keep fueling it, don’t sign up for Medicare until you retire. (To enroll, go to www.ssa.gov.)

Part B covers outpatient care, including doctors’ visits. It costs $121.80 a month for singles with an adjusted gross income (plus tax-exempt interest) of $85,000 or less ($170,000 for couples) who sign up in 2016. Above those income levels, you’ll have to pay $170.50 to $389.80 per month. You’ll also have to pay a surcharge of $12.70 to $72.90 a month on top of the premium for Part D prescription drug coverage.

If you don’t sign up for Part B during the seven-month window around turning 65, and you do not have coverage through your current employer, you may have to pay at least a 10% penalty on premiums permanently when you do sign up. If you work for a company with fewer than 20 employees, your group coverage generally becomes secondary to Medicare at age 65, so you should sign up for both Part A and Part B—otherwise, you may not be covered at all.

Employees of larger companies can choose to keep group coverage while still working and hold off on signing up for Part B. But you must sign up for this coverage within eight months of leaving your job or, once you do enroll, you’ll pay at least a 10% penalty on premiums for the rest of your life.


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