Step 3:
Brush up on Social Security and Medicare

For most people, Social Security is the bedrock of retirement income. And Medicare is likely to be the primary source of health coverage. So understanding how and when to start taking advantage of these programs can help you maximize benefits and positively impact your retirement lifestyle.
Social Security Basics

Who can claim Social Security?

Here are the basic guidelines; however, eligibility rules vary. For example, benefits may also be available for children, spouses, and former spouses. Survivor benefits (benefits for widows, widowers, surviving unmarried children, dependent parents) may also be available.
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You are at least 62 years of age.
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Worked 10 years (40 quarters) or longer and had Social Security taxes withheld.
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Your spouse (or ex) worked and you qualify for benefits on his/her record.
We are providing the information on this page for educational purposes only. Consult your tax and/or financial advisor to see how it applies to your own situation.
Income percentage

Percentage of monthly income that Social Security benefits represent for retirees.

Source: Social Security Administration, June 2019  1
Benefits level

Timing for claiming benefits

Nearly half of Americans file for Social Security as soon as possible, at age 62. It’s a move that could drastically reduce the total amount of benefits you could otherwise receive over your lifetime, and over the lifetime of a surviving spouse. Here’s why timing is everything.
Source: Center for Retirement Research at Boston College, 2015

Early claiming

You can collect Social Security as early as age 62. However, benefits will be reduced by as much as 25% to 30% depending on when you were born. Benefits gradually increase each year from age 62 until full retirement age is reached.

Full retirement age

The age you’re able to claim full benefits varies according to the year you were born. It’s 66 for those born between 1943 and 1954, and gradually increases to 67 for those born in 1960 or later.

Delayed claiming

Doing so can increase benefits 24% to 32% depending on your Full Retirement Age. You must claim Social Security by age 70.
When to claim

The right age to claim all depends on you

Delaying a claim for as long as possible makes sense for some, but there are cases where early retirement is the better option.
Claiming earlier

Reduces monthly benefits and generally makes sense when:

  • Life expectancy is shorter
  • Income is needed for immediate cash flow
  • Qualifying for additional family benefits
  • Employing certain strategies that can enhance benefits for couples
Claiming later

Increases monthly benefits and makes sense when:

  • Life expectancy is longer
  • Working longer
  • Spousal, or surviving spouse, benefits need to be maximized
  • Looking for tax savings options and increased portfolio longevity
Claiming strategies

Three common Social Security strategies

Get the timing right, and you may boost monthly benefits for yourself and a spouse or dependent.
Here are your options:

Delayed Retirement

Waiting to claim on your own record provides delayed retirement credits for each year after full retirement age (FRA). If you were born in 1943 or later, potential benefits increase by up to 8% per year, up to age 70.

File and Suspend

Claim benefits at FRA and suspend the claim in order to accrue Delayed Retirement Credits

Deemed Filing

Once your spouse reaches his/her FRA, they would be entitled to receive the higher of their primary benefit and spousal benefit unless they choose to delay filing on their own record until as late as age 70 to take advantage of Delayed Retirement Credits.
Taxable income schedule

The more you make, the more your benefits could be taxed.

There are some exceptions. For example, higher Social Security benefits can also create tax savings opportunities, by application of the IRS Provisional Formula or by timing and amount of withdrawals from other taxable accounts correctly.
Taxable Income Table
Source: Social Security , January 2019
Medicare basics

Medicare in a nutshell

Medicare is the federal health insurance program for people who are 65 or older, certain younger people with disabilities, and people who qualify under the Special Needs Plans (SNPs). Medicare will help with hospitalization costs and doctor visits, but keep in mind that you’ll probably need some supplemental coverage to help pay for all your healthcare related expenses. It’s important to understand your Medicare, and how it fits into your long-term plan.
Parts of medicare

The building blocks of Medicare

Medicare Parts A and B work together to form traditional Medicare. Parts C and D can be supplemented or added on to increase the amount of coverage or reduce overall cost.


Covers hospital, nursing facility stays, some home health and hospice care. No annual premiums, only deductibles and copays.


Covers doctor visits, testing and routine medical services. You pay annual premiums and copays, but most preventive services are free.

Medicare Advantage Plans

Private insurance alternative that combines Parts A, B, and Part D into a single comprehensive plan. You pay premiums, copays and deductibles.

Prescription Drug Plans

Coverage through private insurers that can be combined with Parts A, B and Medigap to provide comprehensive coverage, or as part of a Medicare Advantage Plan.
When to enroll

One deadline you don't want to miss

If you are not already collecting Social Security at 65, you must enroll for Medicare around your 65th birthday if you want Medicare health coverage.  There’s no need to re-enroll each year, but you can review and make annual changes to your plan. Failure to enroll when first eligible could result in penalties, so be sure to understand your enrollment deadlines and coverage options.
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1 Social Security Basic Facts, Social Security Administration, June 2019,
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We are providing this information for educational purposes only. Consult your tax and/or financial advisor to see how it applies to your own situation.