The age you collect Social Security

While you can start Social Security payments as early as age 62, you won’t get the full amount you have earned until your full retirement age. The full retirement age is 66 for most baby boomers and 67 for everyone born in 1960 or later. A worker born in 1965 who signs up for Social Security at age 62 will get monthly payments that are 30% smaller than if he or she waits until age 67 to begin collecting payments.

“If you sign up before age 66 or your full retirement age, it is discounted, and you are basically shortchanging yourself of getting the full benefit that you earned. That discount carries through your entire life until you die,” says Brent Neiser, a certified financial planner and a senior director at the National Endowment for Financial Education in Denver. Checks further increase by 8% for each year you delay claiming up until age 70. “Try to make your Social Security payment as large as possible when you claim it because you are going to have this lasting payment over time,” Neiser says. After age 70, there is no additional benefit for waiting to claim Social Security.

Meeting Medicare’s deadlines

The standard Medicare Part B premium is $104.90 per month in 2013 for all retirees who earn less than $85,000 ($170,000 for couples). To pay this premium, you need to sign up for Medicare during the seven-month initial enrollment period that begins three months before you turn 65 and lasts until three months after your 65th birthday. If you sign up later, your Part B premiums will increase by 10% for each 12-month period of delay.

“If you do not sign up during your initial eligibility period and you sign up later on, there is a penalty that you have to pay that stays with you the rest of your time you have Medicare,” says Nicole Duritz, vice president for health and family at AARP. If you or your spouse is covered by a group health plan due to your current employment, you need to sign up within eight months of leaving the job or the coverage ending to avoid paying higher premiums.

The age you retire

The age you retire has a huge impact on how much money you can safely spend each year. If you retire at 65 and live until 95, your retirement savings need to provide enough income to finance 30 years of retirement. If you delay retirement until age 70 and live the same number of years, you will only need to pay for 25 years of retirement beyond what Social Security provides.

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