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The New Target Retirement Age: 66

By U.S. News & World Report

The ideal retirement age is no longer 65. A recent Gallup poll of 1,019 adults found that Americans are now hoping to retire at an average age of 66. This is a significant change from as recently as 10 years ago, when more people hoped to retire before age 65. Here’s a look at what leaving the workforce at age 66 means for your retirement finances.

No Social Security reductions. The Social Security full retirement age is 66 for baby boomers born between 1943 and 1954. This is the age when baby boomers are eligible to collect the full Social Security benefit they have earned. However, there is also an opportunity to get bigger monthly payments by delaying claiming Social Security between ages 66 and 70. “Assuming life expectancy is going to be long, delaying is usually a better strategy in terms of getting more money,” says Matthew Hague, a certified financial planner at Guide Wealth Management in New York. “But if you are not in good health, then delay might not be the best strategy.”

[See: 10 Ways to Increase Your Social Security Payments.]

Working in retirement. If you work and claim Social Security benefits at the same time before your full retirement age, part or all of your Social Security benefit could be temporarily withheld. However, once you turn your full retirement age, there is no withholding if you work while also receiving Social Security payments. “Social Security may not be enough to maintain the lifestyle that you really intended to pursue,” says Sally Balch Hurme, author of “Get the Most Out of Retirement.” “A part-time job may give you the money to save for the trip that you really otherwise couldn’t afford or to be able to splurge on your grandkids. Extra money makes it more comfortable to buy those extra special things without cutting into your ability to pay your rent and your utilities and buy groceries.”

401(k) and IRA withdrawals allowed but not required. Retirees in their 60s have an opportunity to begin taking penalty-free retirement account withdrawals, but are not yet required to do so. The 10 percent penalty for 401(k) and IRA withdrawals no longer applies after age 59½. However, retirement account distributions aren’t required until after age 70 ½. Some retirees choose to delay traditional retirement account withdrawals, and the resulting income tax bill, as long as possible to give their money more time to grow before being taxed. However, retirees with large retirement account balances might be able to pay a lower tax rate on 401(k) or IRA withdrawals by starting the distributions in their 60s before claiming Social Security, pension or other sources of retirement income that might push them into a higher tax bracket.

[Read: How to Pay Less Taxes on Retirement Account Withdrawals.]

Remember to sign up for Medicare at 65. You don’t need to sign up for Medicare and Social Security at the same time. You are first eligible to sign up for Medicare during a seven-month window that begins three months before the month you turn 65. Medicare parts B and D both have late enrollment penalties that are permanently added to your premiums if you delay signing up. If you continue to work at a job with a group health insurance plan after age 65, you need to sign up for Medicare within eight months of leaving the job or the coverage ending to avoid the late enrollment penalty. Also, while most retirees have their Medicare Part B premiums withheld from their Social Security checks, seniors who delay claiming Social Security past age 65 will be billed for their Medicare premiums.

[Read: How to Apply for Medicare Without Claiming Social Security.]

Watch out for forced early retirement. While many workers are now aiming to retire at age 66, when you retire is not always a choice. A buyout, business closure or health problem might cause you to retire ahead of schedule. Retirees left their jobs at an average age of 61, five years earlier than current workers would like to retire, the Gallup survey found. “The job market is not always stable, and there’s the potential to get an early retirement package or develop a health concern,” says Brent Sutherland, a certified financial planner at Ntellivest in Pittsburgh. “Life might throw a curve ball at you before your expected retirement age.”

Emily Brandon is the author of “Pensionless: The 10-Step Solution for a Stress-Free Retirement.”

More from U.S. News

3 Ways Retirement Planning Has Gotten Trickier in 2017

Why You Shouldn’t Stick With Your 401(k) Plan’s Default Settings

How Long Does it Take to Vest in a 401(k) Plan?

The New Target Retirement Age: 66 originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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