Your Financial Milestones at Age 70
Turning 70 is more than just a birthday; it marks a crucial period for financial and healthcare planning. For most, this is the final year to earn delayed retirement credits on Social Security, a key decision that has a lasting impact on your retirement income. It's a time to review your financial strategy, maximize your income streams, and ensure your legal and healthcare wishes are in order.
Maximizing Your Social Security Benefits
Delaying Social Security until age 70 is a significant strategy for boosting your monthly income. For each year you wait past your Full Retirement Age (FRA)—which is 66 to 67 depending on your birth year—your benefit increases by a certain percentage. At age 70, this growth stops, making it the optimal time to claim your maximum benefit. For those who can afford to wait, this can mean a substantially larger monthly check for the rest of your life, offering valuable security against rising costs. Remember, your earnings can still be used to recalculate your benefit, potentially increasing your monthly payment if you continue to work and one of your highest 35 years of earnings is replaced.
What to do at 70 for Social Security:
- Initiate Your Claim: Apply for your benefits online through the Social Security Administration's website or by phone.
- Consider Your Spousal Benefit: If you are married, widowed, or divorced, you may be eligible for a higher benefit based on your current or former spouse's earnings record.
- Review Your Earnings Record: Log into your personal my Social Security account to verify your earnings history. Errors can affect your benefit amount.
Navigating Tax Benefits and Retirement Accounts
Age 70 brings important changes related to taxes and retirement savings. Your status as a senior may entitle you to higher standard deductions, and the rules around Required Minimum Distributions (RMDs) become a central focus.
- Increased Standard Deduction: For tax purposes, individuals aged 65 or older qualify for a higher standard deduction. This can significantly reduce your taxable income, potentially lowering your tax bill.
- Required Minimum Distributions (RMDs): While the age for starting RMDs has shifted to 73 (and will move to 75 in 2033), it is still crucial to understand this process. At age 70, you are still likely taking distributions. Make sure you are accurately calculating and taking your RMDs from all traditional retirement accounts, such as 401(k)s and traditional IRAs, to avoid steep penalties. For those with significant assets, delaying distributions can be advantageous, but careful planning is required.
- Charitable Giving: At age 70½ or older, you can make qualified charitable distributions (QCDs) directly from your IRA to a charity. This can satisfy your RMD obligation for the year and can be a tax-efficient way to donate.
Comparing Social Security Claiming Ages
| Feature | Claiming at 62 | Claiming at Full Retirement Age (FRA) | Claiming at 70 |
|---|---|---|---|
| Benefit Amount | Permanently reduced | 100% of earned benefit | Maximum possible benefit (up to 132% of FRA) |
| Impact of Work | May have benefits temporarily withheld due to earnings limits | No impact from earnings | No impact from earnings |
| Delayed Retirement Credits | N/A | Stop accruing | Stop accruing |
| Surviving Spousal Benefit | Potentially reduced | Full amount | Full amount |
Healthcare and Insurance at Age 70
While Medicare eligibility starts at 65, age 70 is an important time to ensure your coverage is still the best fit for your needs. Health needs can evolve, and so should your insurance strategy. If you delayed enrollment for some reason, the late enrollment penalty may now be a factor.
Medicare Options and Enrollment
Most people have already enrolled in Medicare Parts A and B by age 70. However, it is a good time to review your options during the annual enrollment period (October 15 – December 7) to ensure your plan is still optimized.
- Medicare Advantage (Part C): Many seniors choose a Medicare Advantage plan, which is offered by private insurance companies and includes Parts A and B, often with additional benefits like prescription drug, vision, and dental coverage. Reviewing your current plan or considering a new one can save you money and improve your access to care.
- Prescription Drug Coverage (Part D): If you have Original Medicare, you should have a Part D plan. If you didn't enroll when first eligible, you likely face a permanent late enrollment penalty. It's still wise to re-evaluate your plan annually to ensure your current medications are covered cost-effectively.
- Medigap (Supplemental) Policies: These private policies help cover the costs that Original Medicare doesn't, such as copayments and deductibles. The best time to buy a Medigap policy is during your six-month Medigap Open Enrollment Period, which begins the month you turn 65 and are enrolled in Part B. Waiting past this period can result in higher premiums or denial of coverage.
Legal and Estate Planning for Seniors
As you reach your 70s, revisiting and updating your legal documents becomes increasingly important. These documents ensure your wishes are honored and can protect your assets for your family.
Key Legal Documents to Review:
- Will or Living Trust: A will is essential for detailing how your assets should be distributed. A living trust can avoid the probate process and offer more control over your assets.
- Durable Power of Attorney: This document designates a trusted individual to make financial decisions on your behalf if you become unable to do so.
- Advance Medical Directives: This includes a healthcare power of attorney, which designates a person to make medical decisions for you, and a living will, which outlines your preferences for end-of-life care. A living will is a crucial component of estate planning.
Elder Abuse Prevention
Unfortunately, financial and physical elder abuse is a concern. As part of your legal review, ensure that a trusted family member or legal professional is aware of your plans and has a copy of your relevant documents to protect against fraud or exploitation.
Discounts and Other Perks at Age 70
Beyond the major financial and health benefits, a host of discounts and programs are available to you simply for being a senior. These can help stretch your retirement budget and enhance your quality of life.
- Retail and Grocery Discounts: Many stores offer special savings days for senior shoppers.
- Travel Deals: Discounts on flights, hotels, cruises, and rental cars are widely available, often through organizations like AARP.
- National Parks Lifetime Pass: U.S. citizens and permanent residents aged 62 or older can purchase a lifetime pass to national parks and federal recreational lands for a very low fee.
- Entertainment Discounts: Senior pricing is common at movie theaters, museums, and other attractions.
Conclusion
Age 70 is a powerful time for securing your financial and personal well-being. By taking deliberate action to claim maximum Social Security benefits, manage your taxes, and review your healthcare and legal plans, you can build a more secure and comfortable retirement. Understanding exactly what are you eligible for at 70 empowers you to live with confidence and peace of mind. Don't leave money or benefits on the table—be proactive in your planning.
