Happy 65th birthday, boomers. Now what?

By Donna Rosato, senior writer


(MONEY Magazine) -- The first wave of of baby boomers -- including Cher, Steven Spielberg, George W. Bush, Bill Clinton, and nearly 3 million other Americans -- will turn 65 this year. If you're among those celebrating in 2011 or the next few years, you may be feeling a bit gloomy about a birthday that officially crowns you a senior citizen. You're too young to be old, right?

Adding insult to arthritis, this big birthday doesn't offer all the perks it used to: You can't collect full Social Security benefits at age 65 anymore; boomers qualify between 66 and 67, depending on their birth year. And most "senior" discounts -- from travel bargains to blue-plate specials -- kick in from 50 to 60 nowadays, as horrifying as that may be. (See seniordiscounts.com for a comprehensive list.)

That's not to say that this trip over the hill isn't a financial milestone at all. There are still a few important actions to take and things to think about as you approach this new mark of, um, maturity.

1. Get set with Medicare

The biggest change that happens at 65 is tha tyou're eligible for Medicare, the federal health insurance program for seniors. If you're already collecting Social Security benefits, you're automatically enrolled. Otherwise, you must sign up.

"If you don't take Medicare at the appropriate time, you face a lifetime of penalties and will have gaps in coverage," says Ilene Stein, a lawyer at the Medicare Rights Center.

You can enroll, at medicare.gov or by calling 800-772-1213, from three months before you turn 65, and Medicare will kick in the first day of your birth month. You have three months after your birthday to enroll without penalty -- unless you're still working and have comparable insurance through your job, in which case you have eight months after that coverage ends to join up.

Deciding between original Medicare (Parts A and B) and privately run Advantage plans (Part C) can be overwhelming. But you can compare premiums and out-of-pocket costs for all your options at medicare.gov. Just be sure to narrow your Advantage choices to plans that get four or five stars from Medicare.

Facing higher costs under health care reform, some plans may slash benefits or raise premiums. But as of 2012, the highest-rated plans will get federal bonuses to help prevent this.

2. Slash your taxes

At 65 you're entitled to some tax breaks that can add up to serious savings. These include:

* A larger federal deduction. The standard deduction increases for taxpayers 65 and older -- good news for those who don't itemize. For singles it goes from $5,700 to $7,100; for couples in which one partner is 65 it rises from $11,400 to $12,500; when both spouses are 65 or older, it's $13,600. That last boost, for those in the 28% bracket, knocks $616 off your tax bill.

* Property tax breaks. Forty-five states and the District of Columbia give seniors a break on real estate taxes for a primary residence, says analyst Cathleen Calhoun of tax information service CCH; in the vast majority of them you must be 65 to qualify.

The deals vary: In Ohio the Homestead Exemption cuts about $400 off yearly property taxes. In Illinois the assessment on your home is frozen when you or your spouse turns 65. Check with your tax assessor's office to see what's offered and if there are any income limits or prerequisites.

3. Assess retirement plans

Sixty-five may no longer be the retirement turning point it used to be, but it's still a watershed year psychologically. If you're still working -- nearly half of leading-edge boomers are, a recent AARP survey found -- you may be feeling an itch to get out. Put that desire to use by thinking about how you'd like to spend your retirement. Will you travel? Will you work at all? Will you move?

Next, figure out how much your dream life will cost, and stress test your nest egg. The Retirement Income calculator can help you determine how much income your savings, Social Security, and any pension will provide. If it isn't enough, you could dial back your plans or work a few more years to postpone drawing on your savings and collecting Social Security.

Delaying the latter beyond your full retirement age increases your benefit 8% a year. Determine what your payout will be with the Retirement Estimator at ssa.gov. Who says you can't always get what you want? Oh, just some old dudes. To top of page

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