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Every month, approximately 250,000 Americans turn 65 years of age. For most, retirement represents an opportunity to enjoy life and the leisure activities for which they simply didn’t have time during their working years. But it’s also a time to make important decisions about personal finances. If you haven’t saved enough money to hit your retirement goal, you need to start asking some hard questions about where that money is going to come from. (If you don’t have a retirement goal number, here are some tips to help you figure it out.)
The question that an increasing number of would-be retirees are asking is whether it makes sense for them to continue working after they reach retirement age. Certainly, working after 65 has some positive financial incentives. It means continuing to receive a salary and to increase savings, as well as fewer years living on a fixed income. It also means increasing the amount of money you receive from your social security benefits. But there are also some often overlooked disincentives to working after you turn 65, and retirees need to be aware of all the facts in order to make an informed decision.
If you plan to continue working after age 65 and are covered by health insurance from your work, you might think you don’t need to sign up for Medicare. What you might not know, however, is that not signing up for Medicare at age 65, even if you’re still working, can hurt your finances when you do retire.
In fact, if you don’t sign up for Medicare during the seven months following your 65th birthday, you might find yourself paying 10 percent more for your Medicare Part B premiums after you do retire. And an additional 10 percent is tacked on to your premiums for every year you’re eligible for Medicare but don’t sign up.
You could also find yourself facing a Medicare Part D premium penalty if you don’t enroll in Medicare when you first become eligible. Finally, many retirees who feel they need extra health insurance for the things not covered by Medicare buy private insurance in the form of a Medigap policy. If you don’t purchase such a policy within one month of the time you sign up for Medicare Part B, you might not be able to buy this kind of policy down the road, or you could find yourself paying more for it than you would if you signed up during open enrollment.