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5 Things to Do Before You Turn 65
Greg Lavelle • September 8, 2020
By 2030, all Baby Boomers will be 65 or older. So throughout this decade, many of you will be reaching an important milestone. As your 65 birthday approaches, make sure you address these four steps for better retirement preparedness.
Make a plan for Social Security.
If you were born in 1955 or later, Social Security defines your full retirement age as 66 or 67 (depending upon your exact birth date). So, the old assumption that you can retire at 65 is not entirely true. You can claim benefits early, but they will be permanently reduced.
Or, you can wait until your full retirement age and claim your full scheduled benefits. Those who wait until age 70 will enjoy monthly payments that are about 30 percent higher than they would have been, if they had claimed them at 66.
For most people it does seem best to wait until at least full retirement age to claim benefits. But since each situation is different, the main point is to estimate Social Security benefits as you approach age 65 and then make a plan based upon those figures.
Enroll in Medicare.
You become eligible for Medicare when you turn 65, but you can begin the enrollment process as early as three months prior to your birthday. Those who have already claimed their Social Security benefits are automatically enrolled in Parts A and B, so they don’t need to do anything.
Otherwise, you will need to enroll at age 65, and decide whether you want Parts A and B or to enroll in a Medicare Advantage (Part C) plan instead. You might also wish to elect a Medigap plan or Part D (prescription) plan. Talk to an insurance professional about your options.
Consider long-term care insurance.
About half of people turning 65 today will eventually need long-term nursing care. With the average cost hovering at $140,000, you might someday feel glad you purchased long-term care insurance. Consider it now, because premiums jump about 8 to 10 percent after you turn 65.
Look for property tax breaks.
Some states and municipalities offer a property tax break for those over 65, but you usually have to file for it.
Meet with your financial advisor.
It’s a good idea to meet with your financial advisor regularly, but especially as you approach retirement. Give us a call to schedule an appointment, and we can help you estimate Social Security benefits, make decisions about your budget, and answer any other questions you might have at this time.
As a business owner, safeguarding your enterprise against unforeseen events is crucial for long-term success. Life insurance offers several strategies to protect your business, ensure continuity, and provide financial stability during challenging times. Two primary methods are buy-sell agreements and key person insurance. Buy-Sell Agreements A buy-sell agreement is a legally binding contract that outlines the procedure for transferring ownership if an owner departs due to death, disability, or retirement. Funding this agreement with life insurance ensures a smooth transition and financial security for the remaining owners and the departing owner's beneficiaries. Types of Buy-Sell Agreements Cross-Purchase Agreement: Each owner purchases a life insurance policy on the other owners. Upon an owner's death, the surviving owners use the policy proceeds to buy the deceased owner's share. This method is often suitable for businesses with a few owners. Entity Purchase Agreement: The business itself owns life insurance policies on each owner. If an owner passes away, the business uses the proceeds to buy back the deceased owner's share, redistributing it among the remaining owners. This approach is typically preferred for businesses with multiple owners. Key Person Insurance Key person insurance is a policy that a business takes out on essential employees whose loss could significantly impact operations. The business owns the policy, pays the premiums, and is the beneficiary. If a key person dies or becomes disabled, the policy proceeds can be used to: Cover the costs of finding and training a replacement. Offset lost revenue resulting from the key person's absence. Reassure clients, creditors, and investors of the business's stability. This strategy is vital for businesses where certain individuals are integral to success, such as top executives, lead developers, or primary sales personnel. Additional Strategies Beyond buy-sell agreements and key person insurance, consider these life insurance strategies: Collateral Assignment: Use a life insurance policy as collateral for business loans. In the event of the owner's death, the lender is paid from the policy proceeds, preventing financial strain on the business. Executive Bonus Plans: Provide key employees with life insurance policies as part of their compensation package. This not only offers them personal financial protection but also serves as an incentive for retention. Deferred Compensation Plans: Promise to pay key employees a certain amount at retirement, funded through life insurance policies. This ensures the business can meet its obligations without affecting cash flow. Implementing life insurance strategies is essential for business owners aiming to protect their enterprises from unforeseen events. Work with us to explore your life insurance options and we can help your business remain resilient and continue to thrive.
Term life insurance provides coverage for a specified period, such as 10, 20, or 30 years. If you outlive your term policy, the coverage ends, and no death benefit is paid to your beneficiaries. As you approach the end of your term, it's essential to evaluate your current financial situation and consider options to maintain life insurance coverage if needed. Options to Consider Annual Renewable Term: Some term policies offer an option to renew annually after the initial term expires. While this allows you to extend coverage without a medical exam, premiums typically increase each year based on your age, making it a potentially costly option over time. PROGRESSIVE.COM Policy Conversion: Term-to-Permanent Conversion: Many term policies include a conversion feature, allowing you to convert your term policy into a permanent life insurance policy, such as whole or universal life, without undergoing a medical examination. This option can provide lifelong coverage and build cash value, but premiums will be higher than those of the original term policy. NEWYORKLIFE.COM Purchasing a New Policy New Term Policy: Applying for a new term life insurance policy can be an option, especially if you're still in good health. However, premiums will be higher due to increased age, and you may need to undergo a medical exam. Permanent Life Insurance: Alternatively, you might consider purchasing a permanent life insurance policy, which provides lifelong coverage and accumulates cash value. This option is generally more expensive but offers additional benefits. Exploring Alternative Coverage: Final Expense Insurance: Designed to cover end-of-life expenses, such as funeral costs and medical bills, final expense insurance offers a smaller death benefit with more affordable premiums and may not require a medical exam. Guaranteed Universal Life Insurance: This type of policy provides coverage for a specified age (e.g., up to age 90 or 100) with lower premiums compared to whole life insurance, focusing primarily on the death benefit without significant cash value accumulation. Take Action Now As your term life insurance policy nears its expiration, assess your current financial needs and health status to determine the most suitable course of action. Consulting with an insurance professional can help you navigate your options and select the best solution to ensure continued financial protection for your loved ones.
