The 55+ age portal is an entry ramp to a superhighway of opportunity, paved with a wide range of programs, policies, and choices, all of which can impact your financial and physical well-being. The scenery will come at you much quicker than you imagine, and there are more than a few sharp curves in the road. It’s best to be prepared and anticipate both the opportunities and the obstacles.
One caution: I’ll write about my experiences, having traveled the 55+ road for 25+ years. But I’m not a financial advisor (certified or otherwise), nor am I an attorney (or even a paralegal). As such, the narrative that follows is more anecdotal than scientific, but I hope it’s useful.
Social Security comes early
If you’re eligible, you can begin drawing a modest monthly Social Security Retirement check at the minimum retirement age (62) or wait until you reach your full retirement age some years later and receive a larger monthly check. Nearly every financial article I’ve read recommends waiting until your full retirement age in order to draw the larger benefit.
These analyses are mainly presented in monetary terms, focusing on the benefits you receive by delaying the decision with little or no discussion of what the delay might mean in other terms. The monetary aspect is certainly important; but there are many other important lifestyle issues that need to be considered as well.
For instance, given my health and family history, there was a strong possibility I’d pass away before reaching my full retirement age. Additionally, even if I made it to the full retirement age, I visualized myself in a nursing home, drawing a long-awaited Social Security check, with nothing to spend it on except Depends and Ensure. Not a good scenario.
Another factor was that Gina and I were each eligible for full Social Security Retirement benefits. Although one of us could draw early, and the other late, that strategy was scarcely mentioned in most the analyses. Nor did many of those analyses address the impact of the early/delayed decisions on the surviving spouse.
Finally, few of the studies addressed how the early Social Security benefits might be used for things like paying off debts (i.e., mortgage), investing/saving to increase our estates, or recreational travel.
Overall, while the initial monetary analyses were very helpful, and a great starting point, they fell short because they didn’t take into account the non-monetary cost (or benefit) factors.
There are many other waypoints as you age beyond 55. I’ll discuss a few of them in a somewhat abbreviated form, with a strong suggestion that you augment any monetary considerations with the non-monetary factors that are appropriate in your situation before making any decisions.
Medicare (Age 65)
We’ve found Medicare to be very good and widely accepted. However, it doesn’t cover everything. Medicare generally doesn’t cover: routine dental exams, cleanings, fillings, crowns, and dentures; hearing aids, eye exams and eyeglasses, long-term care, and certain prescription drugs. And even for those things it covers, a co-pay is relatively common. Fortunately there are Medicare-Supplement plans that cover these gaps and/or expenses.
Retirement
Although I retired from my formal career at 64, I remained partially employed for 12 more years. I soon discovered:
my Social Security retirement benefits were reduced in proportion to my income.
Medicare premiums are taken out of our Social Security checks and amount to well over $2,000 annually for each of us, and
even though I was drawing Social Security, I was still required to pay into Social Security through my new income stream.
Finally, (and to my dismay) my Social Security benefit was taxable (fortunately this latter issue has been partially alleviated by President Trump’s Big Beautiful Bill).
Retirement Income
There are myriad sources of retirement income, including Defined Benefit Plans, traditional and Roth IRAs, drawing from your investment portfolio, and so forth. However, each of these has implications for your estate, for your tax situation, and in terms of timing and risk.
Let me repeat that it’s best to get more detailed, specific information from a true professional rather than my more anecdotal narratives here.
I also suggest that you give yourself ample time to consider various options and opinions, especially since many of these decisions are irreversible (or very difficult to change). Start early, well before you reach the retirement point, get professional advice, and develop a path that suits your particular situation.
Property Tax
The Great State of Texas “freezes” school property tax on your primary residence once you reach age 65 (or have certain disabilities). The senior tax freeze, or homestead tax ceiling, freezes — locks in place — the school district portion of your property tax bill at the amount you paid the year you qualified, unless you make substantial improvements to your property (e.g., adding a pool). The state law only “freezes” the ISD portion of your property tax bill. However, Texas gave counties and municipalities an option to “freeze” their portions of your property tax bill.
Williamson County and Georgetown both took that opportunity. So, if you live in Georgetown you can count on your school, county, and city property taxes remaining constant (or decreasing) after you turn 65. The key is you must apply for it. Click here to download form 50-114 from the Texas comptroller.
Documents
As you age, your life and your estate can become more complicated, and life’s events can come at you quickly. It’s best to have a few decisions made ahead of time—and documented—to protect your interests. We maintain:
- individual wills
- various Powers of Attorney (e.g., General, Limited, Medical), and
- a readily accessible list of current assets, obligations, incomes, and accounts.
Over time we’ve had friends who encountered major life changes and didn’t have these documents in place; the result was a flaming mess. I strongly suggest you get professional help and guidance to prepare these documents, and that you do it now rather than wait until you need them and must depend on others to guess at your wishes or intents.
We benefited greatly by drawing a roadmap with these various decision points on it and overlaying that with our particular circumstances (health, etc.). We then reviewed our roadmap with an estate planner, our overall financial advisor, and an attorney who specialized in elder law. It was time well taken, and money well spent.
Fortunately we have a wide array of those individuals, and firms, in and around Georgetown. I encourage you to take full advantage of them—sooner rather than later.
Enjoy the journey. Go For It!