Most Americans begin Medicare at the age of 65, and this milestone frequently prompts another major decision: should you also begin Social Security?
It’s easy to see why people associate the two: both programs are essential components of retirement, and both become available in your mid-60s.
However, while most people’s Medicare coverage begins on a specific date, Social Security is far more flexible. Claiming it at 65 may result in a smaller check for the rest of your life.
The Social Security Administration allows you to start receiving benefits as early as age 62. However, if you were born in 1960 or later, your full retirement age (FRA) is 67. Claiming before then results in a permanent reduction. At 65, that equates to approximately 13.3% less per month for the rest of your life.
For someone who relies on Social Security to cover a large portion of their retirement expenses, that’s a pay cut you might notice every month. Even if you have saved well, the lower benefit may limit your future financial flexibility.
Medicare doesn’t require Social Security-here’s how to keep them separate
Many people believe that in order to qualify for Medicare, they must first claim Social Security. Not true. You can enroll in Medicare at age 65, pay your premiums directly (or through automatic bank withdrawals), and wait until later to apply for benefits. If you receive Social Security, your Medicare Part B premiums will be deducted automatically from your check; however, this is not required.
Delaying Social Security beyond your FRA can increase your monthly benefit by approximately 8% for each year you wait, up to age 70. That’s a raise you’ll have for the rest of your life, and it grows even more if you live into your 80s or 90s.
Some retirees use savings or part-time work to “bridge” the gap between Medicare enrollment and Social Security, allowing their benefits to grow over time. Financial advisors frequently recommend this strategy, particularly for those in good health with longer-than-average life expectancies.
If you’re concerned about Social Security’s future–trust fund reserves are expected to run out around 2033–remember that waiting still has benefits.
Even if Congress makes changes, delaying your claim gives you the best possible starting point, which is still useful in most reform scenarios.
Medicare and Social Security may share the spotlight at 65, but they are distinct acts. Signing up for one does not require you to take the other.
If you can cover your bills without Social Security for a few more years, delaying it may result in a larger check–and more peace of mind–for the remainder of your retirement.
