To avoid spending your retirement savings unwisely, here are two financial mistakes that adversely affect seniors.
When you reach your senior years your financial situation changes dramatically. If you are retiring you are no longer benefiting from regular wages. Additionally, if you are interested in moving to an assisted living or retirement home you have to budget for these expenses. So when planning for the future, avoid the following financial mistakes:
Signing up for Social Security Too Soon
At 62 you can begin receiving Social Security benefits. However, if you do you will only receive 75 percent of your total monthly benefit. So what do you do until then? Retirement researcher and professor of retirement planning at American College Wade Pfau reports in the WSJ that you want to spend other assets, such as retirement savings, first. Additionally, Pfau advises married couples entering retirement to delay Social Security for the higher earning partner. This allows the higher wage earner’s Social Security benefits to capitalize, giving you greater dividends later on. Another tip by Pfau is to delay Social Security until you are 70, if possible, to earn the greatest amount of benefits.
Deciphering Medicare Options
As a senior you can save money on health care costs by signing up for Medicare when you turn 65. The question is whether or not you need Part A, Part B, or a Medicare Advantage Plan also known as Part C. There’s also a Part D for prescription drug coverage. You want to choose the right plan to avoid overspending on Medicare benefits. Not sure which to choose?
- Part A, which is an original form of Medicare, provides hospital insurance
- Part B, also original Medicare, provides medical insurance
- Part C is the Medicare Advantage Plan that is provided by a private insurance company, such as an HMO or PPO
- Part D is prescription drug coverage
Part A only covers your expenses for hospital care, while Part B offers more comprehensive coverage. You can choose both Parts A and B. If you have Part C your private insurance company provides benefits. Part D is a supplemental form of coverage that you can add to your Part A, B, or C benefits. Medicare.gov explains the step-by-step process of signing up.
Saving for Senior Care
As you move toward retirement you want to start thinking about how you are going to pay for senior care. Whether you choose to move to a retirement home or opt for an assisted living facility, these two money saving tips will give you peace of mind, and more money in your wallet.