🏥 Medicare: The Most Time-Sensitive Decision
Medicare enrollment has strict windows. Missing them triggers permanent premium penalties. This is the most urgent financial priority at 65.
Your Initial Enrollment Period (IEP)
You have a 7-month window to enroll in Medicare Part A and Part B: the 3 months before your 65th birthday month, your birthday month, and 3 months after. Missing this window without a valid exception triggers a 10% permanent premium penalty for Part B for every 12-month period you were eligible but didn't enroll.
If you are covered by employer health insurance through your own (or spouse's) current employer with 20+ employees, you can delay Medicare enrollment penalty-free until you leave that coverage. COBRA and retiree health coverage do NOT count as current employer coverage for this exception. When your employer coverage ends, you have an 8-month Special Enrollment Period. Do not rely on this without confirming the exact rules with Medicare (1-800-MEDICARE).
Medicare Part Decisions
| Part | What It Covers | 2025 Cost | When to Enroll |
|---|---|---|---|
| Part A (Hospital) | Inpatient hospital, skilled nursing, hospice | $0 for most (if 40+ quarters SS credits) | During IEP — enroll even if delaying Part B |
| Part B (Medical) | Doctor visits, outpatient care, preventive services | $185/month standard (IRMAA surcharge for higher incomes) | During IEP (or SEP if employer coverage) |
| Part C (Medicare Advantage) | Bundled A+B+D through private insurer | Varies widely; often $0–$50/month premium | During IEP or Annual Enrollment (Oct 15–Dec 7) |
| Part D (Prescription Drug) | Outpatient prescription drugs | $50–$100/month average; late enrollment penalty applies | During IEP — delay penalty applies even if healthy now |
| Medigap / Supplement | Fills gaps in Original Medicare | $100–$300/month depending on plan and age | 6 months after Part B starts = guaranteed issue period |
💰 Social Security: The $100,000+ Decision
When you claim Social Security determines your benefit for life — and your spouse's survivor benefit. The decision is irreversible. You can claim as early as 62 (permanently reduced benefit) or delay until 70 (permanently increased benefit).
| Claiming Age | Benefit % of Full Retirement Benefit |
|---|---|
| 62 | 70% (permanent 30% reduction) |
| Full Retirement Age (67 for born 1960+) | 100% |
| 68 | 108% |
| 69 | 116% |
| 70 (maximum) | 124% — 8% per year increase after FRA |
Delaying from 67 to 70 increases your monthly benefit 24%. Break-even age: approximately 82–83 years. If you expect to live past 83, delaying is mathematically better. If you have serious health concerns, claiming earlier may be optimal. For married couples, the higher earner should almost always delay to 70 — because when they die, the surviving spouse inherits the higher benefit for life.
📋 Required Minimum Distributions (RMDs)
Under SECURE 2.0, RMDs from Traditional IRAs and 401ks now begin at age 73 (not 65) — but understanding the rules at 65 prepares you for the significant tax event coming at 73.
- Roth IRAs have NO RMDs for the original owner (another reason to convert to Roth in low-income years between retirement and RMD age)
- The window between retirement at 65 and RMDs at 73 is a golden opportunity for Roth conversions at potentially low tax rates
- Qualified Charitable Distributions (QCDs): at 70½, you can donate up to $105,000/year from your IRA directly to charity — it satisfies RMD requirements AND is excluded from taxable income