NerdWallet: How working past 65 can affect your Medicare, Social Security, HSA and taxes

by | Sep 16, 2022 | Stock Market

This article is reprinted by permission from NerdWallet. The investing information provided on this page is for educational purposes only. NerdWallet does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments. Continuing to work past the traditional retirement age gives many the opportunity to add more money to their nest egg — and delay Social Security, which will bump up their eventual benefits check. In May, 21.9% of Americans ages 65 and older were working, compared with 19.5% in May 2020, according to a study released in June by MagnifyMoney, which analyzed U.S. Census Bureau Household Pulse Survey data.

It’s important to know how working affects your Medicare benefits, Social Security and tax situation. Here are some things to understand about staying in the workforce later in life.You may be able to delay Medicare enrollment If you’re still working at 65 and have access to health benefits through your employer — or your spouse’s employer — you may be able to delay enrolling in Medicare. If your company has fewer than 20 employees, you should sign up for Medicare, but if it has 20-plus employees, you may be able to put it off. If you have the choice, compare what you would pay for group benefits with what you’d pay for Medicare, including any supplemental coverage and prescription drug benefits. “If the group coverage is less, then it may make sense to not get Part B and wait until you retire,” says Julie Hall, a certified financial planner in Ann Arbor, Michigan. (Part A is free for most people, so there’s no point in delaying that unless you have an HSA — more on that below.) Contact your benefits department before delaying to make sure your employer doesn’t require you to enroll in Medicare. Learn more here: Do I need to enroll in Medicare if I’m still working at 65?An HSA and Medicare don’t mix If you have a high-deductible health plan along with a health savings account, or HSA, be aware that you can’t save to an HSA once you’ve enrolled in Medicare. An HSA can be a valuable retirement savings tool, so it’s worth weighing your options if you have access to employer benefits that allow you to delay Medicare. “I see [an HSA] as a triple tax benefit,” says Diane Pearson, a CFP in Wexford, Pennsylvania, about the fact that money can be saved pretax, grow tax-free and be withdrawn pretax to pay for eligible medical expenses. If you’re collecting Social Security, you’ll be automatically enrolled in Medicare Part A when you turn 65; if you want to …

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