Retirement Planning for Age 65 and Beyond: Managing Your Wealth and Expenses

Maybe you’ve heard retirement planning described as a “marathon.” Sticking with that analogy, you've reached the proverbial finish line (or you might soon). But of course, it’s really not the end. It’s the beginning of a new chapter – one that will require shifting more of your focus from accumulating wealth to priorities like managing income, health care and estate planning.

Let’s look at eight opportunities to help make the most of what you’ve worked for, so you can enjoy the retirement you deserve.

Social Security and Retirement Income Strategies

1. Optimize Social Security benefits

You and your planner have likely worked together to create a Social Security claiming strategy that’s right for you. Now it’s time to put it to work.

If you claimed early, you’re already receiving payments (though continuing to work may reduce them). But if you don’t need these funds for everyday expenses, you can invest them for the opportunity to grow for a few more years – especially since your payments are lower than if you had waited.

If you plan to delay Social Security until age 67 (full retirement age for those born in 1960 or later) or the maximum of age 70, you're getting good mileage out of the program. In fact, your monthly benefit could be 30% higher at 67 than at 62, and 77% higher at age 70. However, make sure your other retirement income streams (like your 401(k), IRA, pension or other investments) are enough to support you until then, so you don’t risk having to dip into Social Security earlier than you expected.

Whichever claiming strategy you’ve chosen, talk to your planner and tax professional to understand the impact of taxes, inflation and other factors, to help get the most from your Social Security benefits.  

2. Implement a tax-efficient withdrawal plan

One of the most challenging transitions in retirement is the shift from saving money to spending it. When you withdraw from your retirement and investment accounts, it’s important to do it in a tax-smart way.

There’s no one-size-fits-all solution for tax-efficient withdrawals. Conventional wisdom says to tap into your taxable accounts first and withdraw from your tax-deferred accounts, like traditional IRAs and 401(k)s, and tax-free or Roth accounts later. The logic is that you’ll get to enjoy those tax advantages for longer. But there’s risk to this strategy – it could create a bigger tax bill if required minimum distributions push you into a higher tax bracket down the line. Another approach is to withdraw from accounts proportionally based on the balances in each account. However, this method could unintentionally trigger higher taxes in certain years. It’s important to weigh the pros and cons of any strategy.

Your withdrawal rate and the accounts from which you make withdrawals can also impact other things – like if or how much of Social Security benefits are taxable – or the amount you pay for Medicare (which we’ll discuss in more detail below).

If you haven’t developed a withdrawal strategy yet, talk to your planner and tax professional to find the approach that’s right for you, your goals and your tax situation.

Estate Planning and Beneficiary Coordination

3. Review and update estate plans, wills and revocable living trusts

The start of retirement is a good time to take a fresh look at your estate plan. Especially if it’s been a while since you’ve reviewed it.

A lot may have changed since you established your plan. Make updates now to ensure your will and revocable living trust reflect your current assets, goals, and family dynamics that a divorce, remarriage, birth of grandchildren, or death of a loved one may have altered.

This is also an opportunity to review the people you have named to make financial and health care decisions for you, if you’re unable to make them yourself one day. What about the person you’ve named as your executor? Are these people still appropriate?

4. Ensure proper beneficiary coordination

Updating your will and revocable living trust is critical. But even more important is making sure the beneficiary designations coordinate with your overall estate plan. Beneficiary designations – including those on 401(k)s, IRAs, annuities and life insurance policies – will always trump the terms of your will and revocable living trust.  

Take a little time to review your account beneficiaries – and consider contingent beneficiaries – and your loved ones could avoid some costs and headaches later.

Health Care and Medicare Planning

5. Enroll in Medicare and supplemental plans

Age 65 is commonly associated with eligibility for Medicare. But you don’t have to wait until your birthday to sign up. What’s known as your Initial Enrollment Period or IEP actually lasts for seven months – three months before your 65th birthday, the month of your 65th birthday and three months after. You may have heard that Medicare enrollment is automatic. That’s true if you receive Social Security benefits at least four months before you turn 65. If not, you’ll need to sign up for Medicare by contacting Social Security online, over the phone or in person at your local Social Security office.

It's important to sign up during the IEP. Unless you’ve continued working and have employer coverage (at a business with at least 20 employees) that’s similar in value to Medicare – or meet other conditions that qualify you for a Special Enrollment Period – you could be subject to costly late enrollment penalties. Here’s how these penalties work for the two main parts of Medicare:

Medicare Part A late penalty – Part A, also known as Hospital Insurance, covers inpatient hospital care, skilled nursing care, hospice, lab tests, surgery and more. Most people are eligible for premium-free Part A coverage. But if you need to buy it, and don’t buy it during the IEP, your monthly premium may go up 10%. And you’ll have to pay the penalty for twice the number of years you didn’t sign up.

Medicare Part B late penalty – Part B is also called Medical Insurance and generally covers medically necessary services, like doctor visits and tests, along with outpatient care, home health services and more. If you don’t qualify for a Special Enrollment Period (for example, by having employer coverage when you were first eligible for Medicare), you’ll pay an extra 10% for each year you could have signed up for Part B but didn’t. That higher premium stays with you as long as you have coverage.

Another note about timing: If you’re enrolled in a high-deductible health plan and contributing to a health savings account, you must stop contributions at least six months before Medicare enrollment.

One more thing to consider when you’re transitioning to Medicare is whether you might need Medicare Supplemental Insurance, or Medigap. Medigap is coverage you can buy from a private health insurance company to help pay Medicare out-of-pocket costs. There’s a one-time open enrollment window that starts the first month you have Medicare Part B and you’re 65 or older. During this period, you can get a Medigap plan with no medical underwriting. If you change plans in the future, there may be medical underwriting, which could make it difficult to switch.

6. Manage IRMAA considerations

Did you know your income may determine how much you pay for Medicare? If your income from your tax return two years prior is more than $106,000 (filing as single) or $212,000 (filing jointly), you could be subject to the Income-Related Monthly Adjustment Amount, a surcharge added to Medicare Part B and Part D (Prescription Drug Coverage) premiums.

IRMAA follows a sliding scale that increases your premium as you reach certain income levels. For Part B, for example, the standard monthly premium in 2025 is $185. But IRMAA increases your premium to between $259 and $628.90, depending on your income.

As you talk to your planner about managing retirement income and implementing a withdrawal strategy, IRMAA considerations should be part of the conversation. If your strategy leaves you with enough taxable income to trigger IRMAA, you may need to reconsider or readjust to minimize the impact on your retirement costs.

Expense Management and Housing Considerations

7. Downsizing and capital gains tax planning

As you move into retirement, you’ll likely see a pronounced shift in the way you spend money. With more free time, you may spend more on dining out, travel or entertainment. Transportation, clothing and other expenses may drop when you stop working.

Like many retirees, you might also be thinking about cutting your cost of living by downsizing to a smaller home – or at least one in a more affordable area. Downsizing can mean lower mortgage payments and property taxes, along with reduced utility and insurance bills. But it’s more than just housing costs that can shrink. You might find you no longer need multiple cars if you move to a more walkable neighborhood. Plus, downsizing can force you to declutter and simplify your life.

Managing capital gains is always a critical part of your tax planning, but especially if you’re selling a huge asset like your home. Here’s the good news: If you have a capital gain from the sale of your primary home, you may be able to exclude up to $250,000 of that gain from your income – or up to $500,000 if you file jointly. You’re eligible for the exclusion if you’ve owned the home – and used it as your main residence – for at least two years out of the five years prior to the date of sale. You can meet the “ownership” and “use” tests during different two-year periods, as long as you meet both during the five years.

8. Take advantage of penalty-free HSA distributions

If you’ve been contributing to a health savings account, you’ll have an important source of income that you can draw from for medical expenses. Withdrawals are tax-free and penalty free if you use the money for qualified medical expenses (like deductibles, copayments and coinsurance).

Once you turn 65 however, you can withdraw money from your HSA for any expense – not just health care – without paying a penalty. That can provide added flexibility as you manage your retirement income, but you’ll still owe income tax on any nonqualified withdrawals.

One more thing to keep in mind: You can’t contribute to an HSA after you enroll in Medicare coverage. However, the HSA is always yours, even after you retire. And the money stays in the account until you use it.

Make the Most of Your Retirement Years

Retirement planning at age 65 and beyond is about executing the strategies you’ve worked hard to create and enjoying the lifestyle you’ve imagined – while still managing your income, exploring opportunities and guarding against risk. Talk to your planner to make sure you’re making the right moves for a long and secure retirement.