Emily Brandon offers 10 no-nonsense tips to lower retirement costs in her blog for U.S. News and World Report:
1) Delay retirement withdrawals. Seniors over 70 1/2 aren’t required to take distributions from their retirement accounts, and thanks to the Worker, Retiree, and Employer Recovery Act, everyone else is temporarily saved from being penalized for not taking a withdrawal for 2009.
2) Don’t put off distributions altogether. Your clients only have a respite from taking withdrawals for one year. After 2009, anyone over 70 1/2 must take at least the minimum annual distribution from their retirement accounts. If they don’t they may be subject to a tax penalty of 50 percent of the amount they should have withdrawn, in addition to regular income tax on that amount.
3) Delay claiming Social Security. You’ve probably heard this before, but just because your clients can begin taking Social Security benefits at age 62, that doesn’t mean they should. Payouts are permanently reduced for people who sign up before their full retirement age (65 for people born before 1943). Of course, if your clients can hold on until age 70, they’ll get the maximum benefit, as well as boosting the dollar value of the annual cost-of-living increase.
4) Sign up for Medicare on time. If your clients decide to retire before age 65, enrolling in Medicare will never get cheaper. They can begin filling out paperwork up to three months in advance of their 65th birthday, and in the three months following it. After that grace period, the premium increases 10 percent for each 12-month period.
If your clients continue working past 65, and are enrolled in a group health plan, they can still enroll in Medicare, or get an eight-month period to enroll once their coverage ends.