Planning to retire on your 65th birthday? We didn't think so

The traditional notion of retirement – a switch from full-time work to full-time leisure at age 65 – is becoming a thing of the past for millions of Americans. 

Every day 10,000 baby boomers reach the Medicare eligibility age of 65, and many of them are choosing to work beyond that traditional retirement mark, while others might retire but ultimately return to work later on. In fact, according to a recent UnitedHealthcare survey of 1,000 nationally representative Americans 62 and older, 24% of those who did retire chose to re-enter the workforce. Half of those did so for financial reasons, but half did so because they wanted to, for reasons such as having something to focus their energy on.1 

The percentage of Americans 65 and older who say they are employed full-time or part-time has continued to increase in recent years, from 12.8% (4 million people) in 2000 to 18.8% (9 million people) in 2016. That’s according to a Pew Research Center analysis of employment data from the U.S. Bureau of Labor Statistics.

Delaying retirement or returning to work may have an effect on your Medicare decisions. Here are some important points to keep in mind if you plan to continue working past your 65th birthday or return to work after retirement.

Why you should consider enrolling in Medicare at 65

As with many things in life, timing matters when it comes to signing up for Medicare. If you’re about to turn 65, you have a seven-month window called an Initial Enrollment Period (IEP). That includes the month of your 65th birthday, the three months before and the three months after.

For example, if your 65th birthday is on June 15, then your IEP starts on March 1 and ends on Sept. 30.

If you don’t have a health insurance plan through your employer, your IEP is the best time to figure out what kind of Medicare coverage would work best for you and sign up.

Even if you have coverage through your employer, and you plan to keep working, check with your employer’s human resources department or benefits administrator to see if Original Medicare (Parts A and B) might work hand in hand with your employer coverage. (Many opt to sign up for Medicare Part A at age 65 either way since most people can get it without paying a monthly premium).

How Social Security benefits can affect your Medicare enrollment

If you already receive Social Security benefits when you turn 65, you’ll be automatically enrolled in Original Medicare (Parts A and B), and your Medicare card will arrive in the mail about three months before the month of your 65th birthday.

Your Part B premium will be automatically deducted from your Social Security payments. If you don’t want Medicare Part B, you have to notify Medicare to opt out.

Many people wait to claim Social Security until their 66th birthday or later to increase their monthly payments. So, if you fall into this group but still want your Medicare coverage to begin when you turn 65, it’s up to you to enroll because it won’t happen automatically.

Watch out for penalties for delaying Medicare enrollment

If you’re planning to work beyond the age of 65, you can wait until you retire to enroll in Medicare. For many people, that’s the right choice, as their employer coverage is more robust than they’d receive through Medicare. But you’ll first want to consider your prescription drug coverage, and when you’re ready to retire, be aware of the enrollment windows to avoid late enrollment penalties.

If your employer’s plan doesn’t offer prescription drug coverage, or if the coverage it offers isn’t considered as good as what you could get through Medicare, you should strongly consider enrolling in a Medicare Part D prescription drug plan. That’s because Medicare imposes a late enrollment penalty that will increase your monthly premium if you later decide to sign up for a Part D plan, and that penalty is permanent. You must be enrolled in Part A and/or Part B of Medicare before you can enroll in a Part D plan.

When you retire and lose your employer coverage, you’ll be eligible for what’s called a Special Enrollment Period (SEP). You can enroll in Original Medicare (Parts A and B) for up to eight months after the month you retire or your employer health plan coverage ends, whichever comes first. But if you delay enrollment beyond eight months, you could pay more for your Part B premium — and in most cases, those higher premiums stick with you for as long as you have Part B. 

For each year you delay enrollment in Part B, you will have to pay an extra 10% of the Part B premium. For example, people who delay enrollment for five years could end up with a 50% higher premium for their Part B coverage.

Want Medicare Advantage or Medicare Part D when you retire? Your enrollment window is shorter.

When most people sign up for Medicare, they also choose to enroll in a private Medicare plan — either a Part D prescription drug plan or a Medicare Advantage plan, also called Medicare Part C.

Medicare Advantage plans provide additional benefits beyond those of Original Medicare (Parts A and B), such as dental, hearing and vision coverage. Many Medicare Advantage plans also bundle in prescription drug coverage. Some also offer fitness or gym programs – which are a plus for active retirees. According to the UnitedHealthcare survey, 38% of those with retirement goals state their top goal is fitness-related.

But the window to sign up for these types of plans after you retire or lose your employer-sponsored coverage is shorter — only two months. And keep in mind that it can take some time for plans to process your application. To avoid a lapse in your coverage after your employer-sponsored coverage ends and before your Medicare Advantage or Part D coverage begins, consider making your decisions at least a few months before your employer coverage is scheduled to end.

But remember: Those late-enrollment penalties for Part B and Part D are permanent and can have a meaningful impact on your finances throughout your retirement. So it’s important to think through these decisions carefully.

The bottom line

Just because you delay your retirement beyond the age of 65, it doesn’t necessarily mean you should also delay your Medicare enrollment.

This decision is not black and white. It’s heavily dependent on your circumstances and can have lasting consequences. So armed with some baseline knowledge from the above tips, talk to your HR or benefits coordinator at work who can give you personalized advice based on your unique circumstances.

You can also visit or call 1-800-MEDICARE (1-800-633-4227) (TTY: 1-877-486-2048, 24 hours a day, seven days a week). Or call your local Social Security Administration office at 1-800-772-1213 (between 7 a.m. and 7 p.m. Monday through Friday) or visit the Social Security website at

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