With so many critical decisions coming up, these tips from Merrill can help you plan for the next steps in your financial journey.
Turning 65? Congratulations! You are in good company. A record-setting 4.2 million American baby boomers turn 65 in 2025, according to the Retirement Income Institute at the Alliance for Lifetime Income.
Though you may share this milestone with other boomers, the journey ahead will likely be different for each of you. Perhaps you are still working—a growing number of those over age 65 continue to work. Or maybe you have already retired. Either way, there are many important financial decisions you need to start considering. Because you will be funding a retirement that could last 30 years or more, these decisions take on even more importance.
To help you identify the next steps on your financial journey, check out this 65th birthday checklist. Use it to help you plan discussions with your financial advisor.
If you are still working, take advantage of “catch-up” contributions Now is the time to make a final push to save more in the retirement accounts you will soon turn to for income. Anyone 50 or older can add an extra $7,500 annually to their employer-sponsored retirement plan and an extra $1,000 to a traditional or Roth IRA.
Visit SocialSecurity.gov to see where you stand You can find your full retirement age, which can help you decide when to begin claiming benefits. Keep in mind you do not have to begin claiming benefits as soon as you retire. Waiting until your full retirement age will give you a bigger benefit to help cover essential expenses. You can also calculate your benefit based on your earnings record and ensure that record is accurate.
Create a retirement budget—and a plan for covering those expenses Your financial advisor can help you project essential, important and aspirational expenses in retirement, review potential sources of income, adjust your investment strategies, suggest tax-efficient ways to tap your retirement accounts, and create a realistic, sustainable retirement income plan. If your guaranteed income sources (such as Social Security and a pension) are not enough to cover essential living expenses, you may want to explore annuities, dividend stocks and bond ladders as ways to augment your income. Or perhaps consider working part time or consulting after you retire. Continuing to work in retirement can provide an important sense of identity and purpose as well.
Sign up for Medicare Your initial enrollment period begins three months before you turn 65 and ends three months after you turn 65. What is at risk if you forget? If you are retired and you do not sign up during that window, your premiums may be higher as a result. For those still working, an eight-month sign-up window begins the day you stop working (or lose your employer coverage). Explore all the pros and cons of choosing Medigap and Medicare Advantage plans so you can get a better handle on healthcare costs in retirement.
Got an HSA? Know the new rules Money in your health savings account, or HSA, can now be withdrawn for any reason—not just for qualified medical expenses—without incurring any penalties. But you will have to stop making contributions once you sign up for Medicare. Remember you will need to pay ordinary income taxes on withdrawals not used for qualified medical expenses (those include Medicare and long-term care premiums).
Start crafting your legacy If you have not yet set up a will or trust and appointed a durable power of attorney, now is the time to do so. Also review the beneficiary designations on all your accounts and insurance policies to ensure your assets go where you want them to go. Document your entire financial life for your heirs and loved ones.
Talk to your family about long-term care People turning 65 today have almost a 70% chance of requiring some type of long-term care, according to the U.S. Department of Health and Human Services.
Now is the time to have a conversation with your family about how you would like to manage that care, if needed, and any financial arrangements you have already made. Select someone as your healthcare proxy to make medical decisions on your behalf if you are unable to. Medicare will not cover most of the costs.
Consider purchasing a long-term care insurance policy or adding a life insurance policy with a long-term care rider. You could also earmark your HSA or additional savings to cover the costs, but you risk depleting your savings.
Remember: The financial decisions you make at 65 are especially important, because you will have fewer chances to change course. Seeking professional guidance can be especially valuable.
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