Think Twice
Retirement can make ordinary money choices much less ordinary. Once Social Security, Medicare, required withdrawals, and tax rules overlap, a harmless-looking decision can trigger permanent benefit reductions, higher premiums, extra taxes, or years of added costs. These moves deserve a second look after 60.
Claiming Social Security As Soon As You Can
Social Security retirement benefits can begin at 62, but claiming before full retirement age permanently reduces the monthly amount. For people born in 1960 or later, full retirement age is 67, and claiming at 62 can reduce the benefit by as much as 30%.
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Waiting Past 70 To Claim Social Security
Delayed retirement credits increase Social Security benefits only until age 70. Postponing a claim beyond that age does not produce a larger monthly retirement benefit, so waiting longer can simply mean passing up payments you were already eligible to receive.
Claiming Benefits While You Are Still Working
If you claim Social Security before full retirement age and keep earning wages, part of your benefits can be withheld. In 2026, people under full retirement age all year lose $1 in benefits for every $2 earned above $24,480.
Stopping Work With Fewer Than 35 Earnings Years
Social Security uses your highest 35 years of earnings to calculate retirement benefits. If you stop with fewer than 35 years, zeros enter the calculation, while low-earning years can also reduce the average used to determine your benefit.
Putting Off Medicare Part B Without The Right Coverage
Delaying Part B can be costly if you do not qualify for a Special Enrollment Period. The penalty generally adds 10% to the Part B premium for every full 12-month period you could have enrolled but did not, usually for as long as you have Part B.
Assuming COBRA Lets You Delay Medicare
COBRA does not extend Medicare’s Part B Special Enrollment Period. Medicare says the eight-month window starts when employment or job-based coverage ends, even if you elect COBRA and keep that coverage afterward.
Going Too Long Without Coverage
If you go 63 days or more without Part D or other creditable drug coverage after becoming eligible, a penalty can apply. It generally equals 1% of the national base beneficiary premium for each full uncovered month and can continue as long as you have Part D.
Missing Your Medigap Open Enrollment Window
Federal Medigap open enrollment lasts six months beginning when you are 65 or older and enrolled in Part B. During that window insurers cannot deny you because of health problems; afterward, coverage may cost more, offer fewer choices, or be unavailable.
Dropping Part B Just To Save The Premium
Canceling Part B can create more than a temporary gap. If you later want it back without a Special Enrollment Period, you may have to wait for the General Enrollment Period and could face a lasting late-enrollment penalty.
Continuing HSA Contributions After Medicare Starts
Once you are enrolled in Medicare, your HSA contribution limit becomes zero. This can surprise late enrollees because premium-free Part A may be retroactive for up to six months, potentially making recent HSA contributions excess contributions.
Doing A Huge Roth Conversion In One Year
The taxable portion of a Roth conversion is included in gross income for that year. Because Medicare generally uses tax-return income from two years earlier for IRMAA, a large conversion can later increase Part B and Part D premiums.
Taking A Large IRA Withdrawal After Social Security Starts
Traditional IRA distributions are generally taxable income, and extra income can also change how much Social Security is taxable. Depending on total income, up to 85% of Social Security benefits can be included in taxable income.
Delaying Your First RMD Until The Following Spring
Your first required minimum distribution can generally be delayed until April 1 of the year after you reach the applicable RMD age. But the next RMD is still due by December 31, potentially placing two taxable distributions in one calendar year.
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Missing A Required Minimum Distribution
A missed or insufficient RMD can trigger a 25% excise tax on the shortfall. The IRS says that rate can fall to 10% when the mistake is corrected within the required time.
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Taking A Retirement Lump Sum Without A Direct Rollover
If an eligible employer-plan distribution is paid to you instead of transferred through a direct rollover, 20% federal withholding generally applies. Any taxable amount not rolled over within 60 days is included in income for that year.
Draining An IRA To Pay Off The Mortgage
Using one large traditional IRA withdrawal to erase a mortgage can create a taxable-income spike. For Medicare beneficiaries, that same spike can also contribute to higher income-related Part B and Part D premiums two years later.
Selling A Large Block Of Appreciated Investments At Once
Selling appreciated investments can create taxable capital gains. For a Medicare beneficiary, concentrating a large gain in one year can also raise modified adjusted gross income enough to trigger or increase IRMAA later.
Giving To Charity Without Checking QCD Rules
At age 70½ or older, a qualified charitable distribution can send money directly from an eligible IRA to a qualified charity. A properly structured QCD can be excluded from income, making it worth comparing with withdrawing IRA money and donating cash yourself.
Giving Away Assets To Qualify For Medicaid
Gifting assets shortly before seeking Medicaid long-term-care coverage can backfire. Transfers for less than fair market value during the five years before an application can cause long-term-services-and-supports coverage to be denied for a penalty period.
Assuming Medicare Pays For Long-Term Custodial Care
Medicare generally does not pay for long-term custodial care at home, in the community, or in a nursing home. Medicare says beneficiaries pay all costs for non-covered services, including most long-term care.
Taking A Reverse Mortgage Without Pricing The Fees
Home Equity Conversion Mortgages are available to eligible homeowners 62 and older, but they carry real costs. The CFPB says they can include origination charges, closing costs, mortgage insurance, interest, servicing fees, and other ongoing expenses.
Automatically Renewing The Same Medicare Plan
Medicare Advantage and Part D plans can change costs and coverage each year. Annual notices can show changes to premiums, cost sharing, formularies, provider networks, and service areas, so renewing automatically can leave you paying more than expected.
Ignoring An IRMAA Notice After Retiring
IRMAA is usually based on older tax information, which can be painful right after retirement. Social Security lets people whose income fell after certain life-changing events, including work stoppage or reduction, request a lower income-related Medicare adjustment.
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