Liz Weston: Medical insurance coverage concerns complicate decisions about retirement


Dear Liz: I work for an exquisite company that has a generous profit sharing plan. I’m 61 years old and plan on working until I’m 65 and eligible for Medicare.

As a result of some health issues, I’m reducing my hours and it will significantly reduce my income for the following 4 years. I believed this was an excellent plan since it keeps my medical insurance intact, but now I’m wondering if the lower earnings will affect my profit sharing once I retire. I do know the ultimate distribution relies on earnings and time on the job. Should I retire now, while my income is up, or should I wait until I’m 65?

Answer: There are a variety of moving parts to any decision about retirement. How much will medical insurance cost and the way will you pay for it? How much do you’ve saved and the way long are those funds more likely to last? What’s the very best time to use for Social Security and the way will that affect your retirement fund withdrawals? (It’s often best to delay Social Security so long as possible and draw down retirement savings as an alternative, especially if you happen to’re the first earner, but individual situations vary.)

Money is a finite resource, but so are time and energy. Every additional yr you’re employed could put you in higher financial shape, but means one less yr during which you can be having fun with retirement.

Consider talking to your human resources department to search out out exactly how your reduced hours are more likely to affect your profit sharing payout. Then take those numbers to a fee-only financial planner who can examine the remainder of your funds and talk with you about the very best glide path into retirement.

Dear Liz: As a county worker of 44 years, I used to be offered the choice to contribute to Social Security within the mid-Nineteen Seventies. It was not mandatory and I declined. After I retired in 2004, I didn’t apply for Medicare as I wrongly assumed that I’d not qualify. I even have since learned that I can apply for Medicare but that I’d should pay $499 per 30 days as a late enrollment penalty on top of the monthly premium. Do you recognize any way that I can get a portion of the late penalty waived?

Answer: As your situation shows, not getting sound advice about Medicare could be expensive. Failing to enroll in Part B coverage, which pays for doctor’s visits, can incur penalties of 10% for every 12 months you were eligible but didn’t enroll. The penalties are typically everlasting.

There may be an appeals process, but your probabilities of success might not be great unless you possibly can prove that you just delayed enrollment due to bad advice you bought from a government representative. Medicare has more information on its site.

Liz Weston, Certified Financial Planner, is a private finance columnist for NerdWallet. Questions could also be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or through the use of the “Contact” form at


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