Delaying retirement may improve your finances, but it can also trigger these negative consequences.
Continuing to work after the age of 65 can certainly help your financial circumstances. You can continue saving for retirement, and your savings will most definitely grow before you start to withdraw it for the retirement years you have put off. While saving is a good thing, there can be some drawbacks in delaying your retirement. Before you decide that you want to keep working, it’s important to know the negative consequences of working past the age of 65.
Signing up for Medicare. If you aren’t collecting Social Security, you will not be automatically enrolled in Medicare Part B. If you are still working and covered under a group health insurance plan, make sure it is creditable coverage, otherwise you may incur a late enrollment penalty. If you don’t sign up for Part B when you’re first eligible, you may have to pay a late enrollment penalty for as long as you have Part B. Your monthly premium for Part B may go up 10% for each full 12-month period that you could have had Part B, but didn’t sign up for it.
Required Minimum Distributions. Withdrawals from individual retirement accounts (IRA) typically become required at age 70 ½, and income tax will be due on those withdrawals. If an account owner fails to withdraw a RMD, fails to withdraw the full amount of the RMD, or fails to withdraw the RMD by the applicable deadline, the amount not withdrawn is taxed at 50%!
Working past your full retirement age is something you will want to give thoughtful consideration. It may increase your monthly income, however, there could be negative consequences. To be sure you don’t incur Medicare penalties, including Medicare Part B and Part D, contact SeniorChoices NW. We have agents throughout the state of Oregon and SW Washington, including Aloha, Beaverton, Camas, Canby, Clackamas, Forest Grove, Gladstone, Hillsboro, Lake Oswego, Portland, Salem, Tigard, Tualatin, Vancouver, West Linn, and Wilsonville.