In the days when defined benefit pensions roamed the land, retirement income was automatic: you worked for a company, the company contributed to the pension fund. Checks started arriving when you retired, and didn’t stop until you did. End of story, for the most part.
Plenty retirees still have traditional pensions, but they are on the decline – and that leaves a greater share of today’s workers – and tomorrow’s retirees to manage retirement planning on their own. That’s the underlying thesis of Emily Brandon’s new book, Pensionless: The 10-Step Solution for a Stress-Free Retirement (Adams Media). Brandon, Senior Editor for Retirement at U.S. News, writes about the cornerstone elements of putting together a plan – how to get the most from Social Security and Medicare and employer-sponsored benefits. She also – appropriately – focuses on the expense side of the equation, offering strategies for managing lifestyle costs. The book has the benefit of being smart and to the point – that is, very digestible. I also very much like her holistic approach to the topic – we’re on the same page on that score.
I caught up with Emily recently and asked her five questions on some of the key concepts in “Pensionless.”
Q: Strategies available to couples to maximize Social Security have changed in light of the legislation passed last year curtailing file-and-suspend and restricted claims. What’s your message to people who no longer qualify to use those strategies about how they can maximize benefits?
A: While retirees recently lost two Social Security claiming strategies, there are still a variety of ways you can increase your Social Security benefit. If you sign up for Social Security after your full retirement age, which is 66 for most baby boomers, you will accrue delayed retirement credits that will increase your Social Security payments by 8 percent for each year of delay. Members of married couples continue to be eligible for spousal and survivor’s payments, and can coordinate their payments to maximize their lifetime benefit as a couple. Also, retirees between ages 66 and 70 continue to be eligible to suspend their payments, earn delayed retirement credits, and qualify for higher Social Security payments later on in retirement. Your monthly payments will increase by 32 percent if you suspend them for four years between ages 66 and 70.
Q: You have a chapter called “Make the Most of Medicare.” What are the choices people can make to optimize their coverage?
A: It’s incredibly important to sign up for Medicare during your initial enrollment period. If you sign up later, you could be charged higher premiums for the rest of your life. Remember to take advantage of the services Medicare offers without any out-of-pocket costs, including a wellness visit once every twelve months, cardiovascular disease screenings, mammograms, and flu shots. Medicare Part D prescription drug coverage offers a variety of plan choices, and the covered medications and cost-sharing requirements
can change each year. Even if you are happy with your current coverage, it’s important to examine how your medical needs and the plan’s covered medications will change, and to switch plans if another Part D option better meets your needs. Medicare beneficiaries can switch prescription drug plans once per year between October 15 and December 7.
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