The Surprising Reason Your Social Security Checks Might Shrink Once You Turn 65

Even though people born in 1960 or later aren’t eligible for their Social Security benefits in full until age 67, you’re allowed to claim benefits as early as age 62. And while doing so will mean having to accept reduced monthly checks for life, you may have a reason for taking benefits early.

If you’re receiving Social Security and filed before turning 65, you may be used to that steady income. So if your monthly benefits were to suddenly decrease at age 65, it would probably throw your finances for a loop.

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But there’s a reason some Social Security recipients risk having their benefits shrink after their 65th birthdays arrive. And it’s something that needs to be on your radar so you can avoid a similar fate.

Medicare premiums can reduce your monthly benefits

Medicare eligibility generally begins at 65. If you’re not collecting Social Security at the time, you’ll need to enroll in Medicare to begin getting coverage.

But if you’re receiving Social Security benefits, your Medicare enrollment will be automatic at 65 — whether you want that coverage or not. At that point, your Part B premiums will be deducted from your benefits automatically.

So if you were getting a certain amount of money and see that sum decrease upon turning 65, it could mean that you’ve been enrolled in Medicare and are now paying for Part B.

Now if you happen to need health coverage, that’s not necessarily such a bad thing. But you may not need Medicare at 65 if you’re still working and are covered by an employer plan, or if your spouse has a group health plan through his or her job that you’re covered by. So in that situation, you’ll need to opt out of Medicare so you aren’t charged a Part B premium each month.

How to opt out of Part B

If you’re enrolled in Social Security, you generally can’t opt out of Medicare Part A at 65. But since Part A is free for most enrollees, it generally won’t cost you a chunk of your monthly benefits.

If you want to opt out of Part B, you’ll need to contact the Social Security Administration to make that request. You should also receive a welcome packet once you’re enrolled in Medicare. That packet should contain instructions for opting out of Part B, which typically includes having to send your Medicare card back.

Understand how Social Security and Medicare work together

All told, it’s important to understand how Social Security and Medicare work together — especially since the simple act of turning 65 could lead to smaller monthly benefits if you don’t opt out of Part B.

But if you do decide to drop Part B, make sure you have a qualifying group health plan to fall back on. If your group health plan doesn’t cover 20 or more enrollees, you may be subject to surcharges on your Part B premiums for a late enrollment if you don’t sign up at 65 or shortly thereafter.

And remember, you don’t ever want to go without health insurance if you can help it. A single medical event could result in catastrophic costs. So if Medicare is your only option at 65, it pays to enroll, even if it means losing a chunk of your Social Security checks.

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