Investing

Prices and inflation are still a “top concern” as consumers have “gloomy” expectations for the economy, one expert says.
For many individuals and households, the big question is how soon they may see financial relief from higher costs.

baona | Getty Images

The rate of inflation has shown signs of easing, following the highest spike in four decades.
Yet the shock of rising prices continues to have an impact on consumers’ psyches.

“The typical U.S. consumer is looking at the gas station or their grocery store and seeing prices elevated and not coming down anytime soon,” said Ataman Ozyildirim, senior director of economics at The Conference Board.
The nonprofit think tank’s consumer confidence index declined in May amid “gloomy” expectations.
More from Personal Finance:Chart shows fastest-rising costs for Social Security beneficiariesHere’s the inflation breakdown for April 2023, in one chartSeries I bonds still ‘attractive’ as rate falls to 4.3%, expert says
Consumers’ perception of current employment conditions deteriorated the most, The Conference Board found, with those who said jobs are “plentiful” dropping to 43.5% from 47.5% in April.
Meanwhile, expectations for inflation were stable, but still high, with inflation expected to average 6.1% over the next 12 months.

“When anecdotally we ask consumers what’s your top concern on the economy, prices and inflation still come out as the top concern,” Ozyildirim said.

A growing share of Americans — 61% — now say price increases have caused financial hardship for their households, according to Gallup, up 6 percentage points from November.
For many consumers, the big question is how soon they may see financial relief.

Borrowing costs, savings rates are higher

The Federal Reserve is raising interest rates to combat the record spike in inflation.
Consequently, borrowing costs are rising on auto loans, credit cards, mortgages and student debt. The caveat is that savers can now earn higher rates on their cash. 
The Fed’s process is like trying to slow the speed of a car, according to Laura Veldkamp, finance professor at Columbia Business School.

When anecdotally, we ask consumers what’s your top concern on the economy, prices and inflation still come out as the top concern.

Ataman Ozyildirim
senior director of economics at The Conference Board

“What we’re doing right now is slowing the rate of inflation,” Veldkamp said.
That means still driving the car forward, but slowly, she said. It does not mean trying to throw the car in reverse, which would prompt negative inflation.
Negative inflation would be “pretty dangerous,” Veldkamp said, since it would remove price stability for what people can expect to pay in the future. This would make it more difficult to value forward-looking contracts such as rents or hiring, she noted.

It would also lead to a collapse of demand, since decreasing prices take away the incentive to buy something today when it will likely be cheaper tomorrow, she said.
Instead, the Federal Reserve is aiming to keep inflation off consumers’ radar screens.
“Their job is to keep prices so stable that you don’t worry exactly what a dollar will be worth a year from now,” Veldkamp said.

Prices not expected to drop ‘anytime soon’

The Federal Reserve’s goal is to bring inflation to a 2% target.
However, the latest readings show the central bank still has room to go before reaching that goal.
The annual inflation rate eased to 4.9% in April, per the consumer price index. The Fed’s preferred inflation measure — the personal consumption expenditures price index — was up 4.7% on an annual basis as of April.
“The increase in prices is not expected to come down to the Fed’s 2% target rate anytime soon,” Ozyildirim said.

Moreover, not every price will move in lockstep, as categories such as automobiles, homes and gasoline are subject to unique influences, such as supply chain bottlenecks, according to James Angel, associate professor at Georgetown University’s McDonough School of Business.
“It’s not like suddenly tomorrow all the prices are going to go back to where they were in 2020,” Angel said.
Inflation tends to create a “vicious circle” in the economy by prompting demand for higher wages, which then triggers higher manufacturing costs and therefore higher prices.
When high inflation does subside to normal levels, it will do so quietly, he said.
A 2% annual inflation rate will add up to more than 20% over a decade, Angel noted.
“But from day to day, you don’t really notice it,” he said. More

While the cost of medical care has recently fallen, it’s still nearly 30% higher than a decade ago, according to the U.S. Bureau of Labor Statistics.
“Spending shocks” and rising health-care costs can put investment portfolios at risk, especially during periods of market volatility.
There are several ways retirees can safeguard nest eggs from the so-called sequence of returns risk, experts say.

Geber86 | E+ | Getty Images

There are plenty of risks for retirees — and those risks may compound by the rising cost of health care in retirement. 
While the cost of medical care has recently fallen, it’s still nearly 30% higher than a decade ago, according to data from the U.S. Bureau of Labor Statistics. Typically, medical prices grow faster than other consumer costs.

There’s also a higher likelihood of retirees needing medical care as they grow older. A 65-year-old couple who retired in 2022 will spend an average of $315,000 in health-care costs throughout retirement, not including long-term care, according to Fidelity Investments.

What’s more, retirees face a greater chance of “spending shocks” due to unpredictable costs, such as medical expenses, according to J.P. Morgan Asset Management’s 2023 retirement guide.
Of course, every retiree’s costs will be different, said certified financial planner Anthony Watson, founder and president of Thrive Retirement Specialists in Dearborn, Michigan. “There’s no silver bullet for this,” he said, noting how health-care expenses can be tough to predict.

Beware the ‘sequence of returns risk’

Periods of stock market volatility can further compound financial issues because of the so-called sequence of returns risk, caused by tapping your portfolio when asset values have declined. Research shows the wrong timing of withdrawals can damage your nest egg over time. 
Retirees may be exposed to the sequence of returns risk through a “shock spending event,” such as expensive health care, or simply higher living expenses over time, Watson said.

More from Personal Finance:Popular home improvements aren’t the ones with best returnDebt deal would push student loan borrowers to repay this fallMany companies adding, expanding tuition assistance
One strategy to reduce this risk is boosting income by waiting to claim Social Security, he said. For 2023, the average retirement benefit is $1,827 per month, but the maximum payment jumps to $3,627 at full retirement age, which is currently 66 to 67.   
Watson also suggests a “cash cushion” to help cover living expenses during a prolonged stock market downturn. “We always have to have a Plan B to fund our living expenses,” he said.
While experts may suggest one to three years’ worth of cash, you may trim expenses or keep less cash by supplementing with a home equality line of credit or pledged asset line of credit that uses your investment account as collateral, he said.

Learn to be an ’empowered patient’

Carolyn McClanahan, a CFP and founder of Life Planning Partners in Jacksonville, Florida, urges retirees to become “empowered patients” when it comes to health-care spending.
“The best way to plan for health-care costs is to learn how to be a good health-care consumer,” said McClanahan, who also is a physician and member of CNBC’s Advisor Council. 

For example, retirees may reduce unexpected medical costs and surprise portfolio withdrawals with a few health moves. You can also ask questions about tests or prescriptions before racking up expenses.
“With health care being so fee-driven, doctors have very little incentive to help you make better decisions about what you can do to keep costs down,” she said.
McClanahan also plugs the financial, physical and emotional benefits of working in retirement, at least with a part-time job. “Work is one big way where people are socially engaged,” which may provide a cognitive boost, she added. More

A GOP-led effort to overturn President Joe Biden’s sweeping student loan forgiveness plan passed the Senate on Thursday.
The White House said it will veto the measure.

The Senate voted to repeal President Joe Biden’s student loan forgiveness plan on June 1, 2023. Biden —pictured here with U.S. Secretary of Education Miguel Cardona in October  — is expected to veto the bill.
Getty Images | Bloomberg

A GOP-led effort to overturn President Joe Biden’s sweeping student loan forgiveness plan passed the Senate on Thursday. The White House said it will veto the measure.
Biden’s plan to cancel up to $20,000 in student debt for tens of millions of Americans is already on hold as the Supreme Court debates its validity.

The measure, which passed the House along party lines last week, would also nullify the pause on student loan payments. That stay on bills has been in effect for more than three years. It might even require borrowers to pay back the interest they’ve saved throughout the pause.
The legislation passed by a 52-46 vote margin, with two Democrats and one independent senator voting with Republicans.

Measure is largely symbolic

Given the expected veto, experts say borrowers have little to worry about.
“It’s not going anywhere,” said higher education expert Mark Kantrowitz. “It’s basically a form of political posturing to appeal to their base.”
More from Personal Finance:Student loan pay pause eased forgiveness for public servantsExperts say SCOTUS will rule against student loan forgivenessWhat’s at stake as SCOTUS weighs student loan forgiveness

Sen. John Thune, R-S.D., acknowledged that the passage of the legislation was mostly symbolic.
“Unfortunately, the president is guaranteed to veto the measure, and there are not enough Democrats in the House and Senate willing to override his veto,” Thune said on the floor Thursday.
Sen. Joe Manchin, D-W.Va., said in a statement that he voted to overturn the president’s plan because the country can’t afford to add another $400 billion to its national debt. That is the expected cost of Biden’s program.
The policy “forces hard-working taxpayers who already paid off their loans or did not go to college to shoulder the cost,” Manchin said.

Democrats call attempt ‘cruel’

Several Democratic lawmakers released statements condemning the legislation.
“Republicans’ cruel attempt to stand in the way of President Biden’s plans to provide relief to tens of millions of Americans suffering under the crushing weight of student loan debt is damaging to our economy and wildly out of touch with the financial realities facing working families,” said Sen. Ed Markey, D-Mass.

“If you kicked Republicans in the heart, you’d break your toe,” Markey added.
Senate Majority Leader Chuck Schumer of New York called the move “a slap in the face” to more than 40 million Americans.
“We should help Americans with student debt, not make their problems worse,” Schumer said. More

Treasury bill yields have climbed over the past few months, and are currently topping 5%.
But there are a few things investors need to know before buying, according to financial experts.

dowell | Moment | Getty Images

Treasury bill yields have climbed over the past few months, with one-month to one-year terms currently topping 5%, as of June 1.
However, there are a few things for everyday investors to know about the Treasury bill purchase process, according to financial experts.

Treasury bills, or T-bills, have terms of four weeks to 52 weeks and are backed by the U.S. government. Investors receive interest at maturity and there are options to reinvest.
More from Personal Finance:How to capture higher savings yields with a CD ladder4 of the best places for cash as the Federal Reserve weighs a pause in interest rate hikesYoung adults are taking longer to reach ‘key life milestones’
But there is not a direct rate comparison with other products because T-bills are typically sold at a discount, with the full value received at maturity, explained Jeremy Keil, a certified financial planner with Keil Financial Partners in Milwaukee.
For example, let’s say you purchase $1,000 worth of one-year T-bills at a 4% discount, with a $960 purchase price. To calculate your coupon rate (4.16%), you take your $1,000 maturity and subtract the $960 purchase price before dividing the difference by $960.   

Fortunately, you’ll see the “true yield” or “bank equivalent yield” when buying T-bills through TreasuryDirect, a website managed by the U.S. Department of the Treasury, or your brokerage account, Keil said.

How to purchase T-bills via TreasuryDirect

If you already have a TreasuryDirect account — say, because you’ve purchased Series I bonds — it’s relatively easy to buy T-bills, according to Keil, who detailed the process on his website.
After logging into your account, you can pick T-bills based on term and auction date, which determines the discount rate for each issue.
“You don’t really know truly what the rate is going to be until the auction hits,” Keil said. The process involves institutions bidding against one another, with no action required from everyday investors. 

How to buy T-bills through TreasuryDirect
1. Log in to your TreasuryDirect account.
2. Click “BuyDirect” in top navigation bar.
3. Choose “Bills” under “Marketable Securities.”
4. Pick your term, auction date, purchase amount and reinvestment (optional).

After the auction, “you get the exact same rate as the Goldman Sachs of the world,” with TreasuryDirect issuing T-bills a few days later, he said.
There is one downside, however. If you want to sell T-bills before maturity, you must hold the asset in TreasuryDirect for at least 45 days before transferring it to your brokerage account. There are more details about the process here.

There’s more liquidity via brokerage accounts

One way to avoid liquidity issues is by purchasing T-bills through your brokerage account, rather than using TreasuryDirect.
Keil said the “biggest benefit” of using a brokerage account is instant access to T-bills and immediately knowing your yield to maturity. The trade-off is you’ll probably give up around 0.1% yield or lower, he said.

George Gagliardi, a CFP and founder of Coromandel Wealth Management in Lexington, Massachusetts, also suggests buying T-bills outside of TreasuryDirect to avoid liquidity issues.
For example, there are low-fee exchange-traded funds — available through brokerage accounts — that allow investors to buy and sell T-bills before the term ends, he said.
“The fees pose a small drag on the interest,” Gagliardi said, but the ease of purchase and ability to sell before maturity “may override the small penalty in interest rates” for many investors. More

The consumer price index is a key inflation measure.
The CPI measures how quickly prices are changing in specific categories of consumer goods and services.
Categories such as housing, health insurance and technology have idiosyncrasies that make inflation tough to measure. Their inflation readings may not reflect reality for consumers.

Ejs9 | E+ | Getty Images

1. Housing

Richard Newstead | Moment | Getty Images

Housing is perhaps the most consequential category in the consumer price index, a key inflation barometer.

Housing is the largest expense for an average U.S. household. The “shelter” category — which measures costs for renters and homeowners — therefore accounts for more than a third of the CPI weighting, the most of any category.
“Every single component [of the CPI] has some idiosyncratic measurement issue,” Zandi said. “But housing is particularly important. It drives a lot of the inflation train.”
Price changes in “shelter” were generally muted before the pandemic, economists said. But Covid-19 warped that dynamic: Housing costs shot up but have slowed and even started to fall in some areas, economists said.

Housing is particularly important. It drives a lot of the inflation train.

Mark Zandi
chief economist at Moody’s Analytics

Nationally, Americans saw rents grow by 5% in April from a year earlier, to about $2,018 a month on average nationally, according to Zillow Observed Rent Index data. That’s a significant slowdown from 17% growth during the prior year, from April 2021 to April 2022.
Here’s the problem: The CPI doesn’t capture those price trends in real time.
It operates with a substantial lag, meaning it can take six months to a year for a decline (or increase) in current housing prices to fully feed through to inflation data, economists said.
“It’s not necessarily a particularly accurate gauge of what’s going on in the housing market right now,” said Andrew Hunter, deputy chief U.S. economist at Capital Economics.
Here’s the reason for the lag: The U.S. Bureau of Labor Statistics collects rent data from sample households every six months. The BLS also divides these sample households into six different subgroups (called “panels”) and staggers when it collects data for each. Per the BLS, rents for Panel 1 are collected in January and July; Panel 2, in February and August, and so on.

That means it can take a year or so to collect data from all the subgroups.
Overall inflation is expected to slow sharply during the second half of the year as the CPI incorporates the housing price cooldown, economists said.
“It’s almost as much of a certainty as you can get, really,” Hunter said.
There’s an additional housing measurement quirk: The BLS tries to assess price changes for homeowners as well as renters, in a subcategory called “owners’ equivalent rent.”
The measure is essentially a survey that reflects the price homeowners believe they could get if they were to rent their home. While somewhat tied to market rents, homeowners aren’t necessarily feeling those inflationary pressures — especially those who own their homes or have a fixed mortgage, Zandi said.

2. Health insurance

Halfpoint Images | Moment | Getty Images

Health insurance prices have been falling by about 4% a month since October, according to CPI data.
Consumers’ out-of-pocket costs haven’t necessarily dropped, though.
For example, the average person with family insurance coverage through an employer-sponsored health plan saw premiums rise to $509 a month in 2022 from $497 in 2021, according to the Kaiser Family Foundation.
Why the discrepancy?
The government doesn’t calculate health insurance inflation by measuring consumers’ direct costs, such as monthly premiums. It’s hard to assess the value consumers get for those premiums; costs may go up, but consumers don’t necessarily get more bang for their buck. An increase in premiums might more reflect poorer underlying health of the insured population than better policy benefits, for example.
So, the government instead measures costs indirectly, based partly on health insurers’ profits. Profit margins serve as a proxy of consumer prices.

Every single component [of the CPI] has some idiosyncratic measurement issue.

Mark Zandi
chief economist at Moody’s Analytics

Early in the Covid-19 pandemic, health insurers’ profits jumped. Consumers were still paying premiums but were generally disallowed from visiting doctors or hospitals for elective procedures.
Now, consumers are using their insurance more often. Insurers’ aggregate profits shrank in 2021 relative to 2020 since they paid out more insurance benefits — and hence the monthly inflation readings flipped negative.
The BLS updates its profit-related calculations once a year, in October.
Health insurance inflation readings may flip positive in fall 2023 and persist into 2024 due to this dynamic, Zandi said. Health care may be among the few consumer categories notching higher inflation toward year’s end when most other categories have been slowing, he said.

3. Consumer electronics

Jordi Mora Igual | Moment | Getty Images

Consumer electronics — like those for smartphones, TVs and computers — were among the few categories that saw deflated prices in 2022.
That trend has continued into 2023: Smartphone prices have declined by 20% in the year through April, for example, according to the CPI.  
However, phone prices haven’t exactly fallen at the store.
“The consumer isn’t necessarily seeing that,” said Kenneth Kim, senior economist at KPMG. “To them, it just seems the price has gone up and up and up each year.”
The duality is due to a “hedonic quality adjustment.”
The BLS adjusts the prices of consumer electronics for quality — improvements in microchips, software and screen resolution, for example — which gives the illusion of a falling price on paper. The agency does the same for other categories like consumer appliances and apparel.
In other words, consumers are getting better-quality electronics for the price they pay. With the adjustment, prices appear to deflate.
“In that sense, it is a lower price because you’re getting a lot more value,” Kim said. More

Inflation has eroded household budgets for well over a year, but the pain has not been shared equally.
By most measures, low-income households have been hardest hit.
However, only Americans in the middle class saw their real wages decline over this time.

Fizkes | Istock | Getty Images

Stubborn inflation has driven households near the breaking point, but the pain of high prices has not been shared equally.
By most measures, low-income households have been hardest hit, experts say. The lowest-paid workers spend more of their income on necessities such as food, rent and gas, categories that also experienced higher-than-average inflation spikes. 

“The bottom line is unexpected inflation has done real damage to the public, but some people face a higher cost,” said Laurence Kotlikoff, a professor of economics at Boston University.

Low-income families have a higher annual inflation rate

“The rich don’t even know what gas prices are,” said Tomas Philipson, former chair of the White House Council of Economic Advisers.
Because higher-income households spend relatively more on services, which notched smaller price increases compared with goods, they came out ahead.
Their inflation rate is roughly 6%, compared with 7% for lower-income households who spend a bigger share of income on food, energy and shelter, according to an analysis by researchers at the University of Pennsylvania’s Wharton School.
More from Personal Finance:Credit card debt nears $1 trillionHow to get started with investing, budgetingHow much emergency savings you really need

Lower-income households also have fewer ways to reduce or change their spending habits and less in savings or investment accounts to fall back on, noted Brian Albrecht, chief economist at the International Center for Law and Economics.
“Inflation makes it hard to make decisions and think about the future, particularly for those with the fewest resources,” Albrecht said.

Middle-income households see slower wage growth

By other measures, Americans in the middle class are getting especially squeezed.
For them, prices increased faster than their income, according to a report by the Congressional Budget Office, while households in the lowest and highest income groups saw their income grow faster than prices over the same time period.
Even though middle-class wage growth is high by historical standards, it isn’t keeping up with the increased cost of living, which in April was up 4.9% from the prior year — making it harder to live the same lifestyle previous middle-class generations did.
“Real wages have declined and that’s a concern for workers,” Philipson said.

Economists’ definitions of middle class vary. The Pew Research Center defines middle class as those earning between two-thirds and twice the median American household income, which was $70,784 in 2021, according to Census Bureau data. That means American households earning as little as $47,189 and up to $141,568 are technically included, although the median income is roughly $90,000.
And yet, within the middle class, households with incomes between $50,000 and $125,000 feel fairly confident about their current economic standing and still have financial buffers to draw on, the latest research from the Bank of America Institute found.
“Job stability has a lot to do with it,” said Aron Levine, Bank of America’s president of preferred banking.

Inflation weighs on most Americans

Aside from their employment status, even those with similar resources are facing different impacts of inflation depending on where they live, whether they have a mortgage or student loan, receive federal benefits or other factors, said Boston University’s Kotlikoff.
But across the board, nearly all households have been slow to adjust their spending habits even as prices rose significantly, which has left them worse off financially, according to a recent “Making Ends Meet” report by the Consumer Financial Protection Bureau.

Instead, Americans are dipping into their savings to keep up their spending, with the personal savings rate of 4.1% representing a 0.4 percentage point drop from March.
At the same time, they are leaning on credit cards to bridge the gap, with balances now up almost 20% from a year ago.
Together, that leaves many Americans — regardless of their economic standing — financially vulnerable in the event of a downturn.
Subscribe to CNBC on YouTube. More

A measure in the proposed debt ceiling deal that would terminate the student loan payment pause is facing heavy opposition from advocates and progressives.
More than 60% of voters want the stay on student loan bills to be extended if President Joe Biden’s sweeping forgiveness plan is struck down by the U.S. Supreme Court, a new poll finds.

House Speaker Kevin McCarthy, R-Calif., arrives at the U.S. Capitol on May 31, 2023.
Sarah Silbiger | Bloomberg | Getty Images

Borrowers, advocates and progressives don’t want to see the payment pause on student loans come to an end.
But that is a part of the debt-ceiling deal, which could be voted on and approved this week. A provision would officially conclude the stay on the bills by September.

Advocates warn that ending the relief could trigger devastating financial consequences for millions of Americans, especially if the Supreme Court blocks President Joe Biden’s student loan forgiveness plan. The justices are likely to strike down the policy, experts say, given their conservative majority. A decision is expected in June or July.
More from Personal Finance:Parents paying for college ‘is the norm’4 strategies to avoid taking on too much student debtThese moves can help you save big on college costs
“This deal takes away the White House’s ability to extend the current payment pause if the Supreme Court kills the relief, making it more likely 40 million people will have to repay loans that the president promised were canceled,” said Astra Taylor, co-founder of the Debt Collective, a union of debtors.
Supporters of terminating the pause say the pandemic has mostly resolved, and that keeping tens of millions of Americans in limbo about their debt obligations could pose risks for both consumers and lenders.

Student debt payment pause is a ‘durably popular’ policy

Since March 2020, the U.S. Department of Education has allowed most people with federal student loans not to make payments on their debt without interest accruing. The bulk of borrowers took advantage of the opportunity.

“The pause on student loan payments remains one of the most durably popular pieces of economic policy because the American people recognize what Washington has long struggled to understand: The student loan system is broken,” said Mike Pierce, executive director of the Student Borrower Protection Center.
Roughly 60% of voters want the pause on student loan bills to be extended if Biden’s sweeping forgiveness plan is blocked by the U.S. Supreme Court, a new poll finds.
The Biden administration has warned that resuming student loan payments without being able to carry out its debt forgiveness plan could trigger a historic spike in defaults and delinquencies because of the economic troubles wrought by the pandemic and borrower confusion over what they owe.

In exchange for voting to raise the nation’s debt ceiling, Republicans had demanded large cuts to federal spending.
As part of negotiations, they also sought to repeal Biden’s executive action granting student loan forgiveness. But the Biden administration refused to agree to that, and the ongoing legal battle over the plan made any legislation potentially moot.

Under deal, pause will ‘cease to be effective’

The pause on federal student loan payments will “cease to be effective” and borrowers will be required to resume paying their bills 60 days after June 30, according to the legislative text of the proposed agreement to raise the debt ceiling. Borrowers’ first due date will likely be in September, experts said.

This deal takes away the White House’s ability to extend the current payment pause if the Supreme Court kills the relief.

Astra Taylor
co-founder of the Debt Collective

As part of the deal, the U.S. Department of Education would also be restricted in its ability to extend this particular relief again, with another prolongment likely only possible from Congress.
Rep. Ayanna Pressley, D-Mass., filed an amendment Tuesday that would strike the provision ending the pause, but her proposed amendment was not included in the final bill.
“Republicans continue to play games with our economy, with disregard for our most vulnerable families,” Pressley said in a statement.

White House spokesman Abdullah Hasan defended the president’s negotiations on behalf of borrowers, pointing out that the administration had planned to end the pause this summer anyway.
“This agreement makes no changes to that plan,” Hasan said.
Correction: Rep. Ayanna Pressley, D-Mass., filed an amendment Tuesday that would strike the debt ceiling deal provision ending the pause on student loan payments. An earlier version misstated the day.
This is a developing story. Please check back for updates. More

A combination of high inflation and a low level of savings are prompting many people to lose confidence in their ability to retire well, research finds.
How wisely retirees take action in four key areas can help improve their lifestyles, according to experts.
For many people, the idea of retirement doesn’t become a reality until around age 45, according to one advisor.

Halfpoint Images | Moment | Getty Images

1. Decide where you will live in retirement

— Key deadline to watch: The sooner, the better.
When it comes to lifestyle, many retirees would prefer to age in place. Yet, it’s important to consider whether your current home will still suit you as you age, according to Craig Copeland, director of wealth benefits research at EBRI.
When it comes to preparing a strategy for where to live in retirement, the sooner, the better, he said.
“Once you have any mobility issues, you really need to be moving on it,” Copeland said. If you plan to relocate, you may want to do it early before health issues set in, he added.
Alternatively, if you plan to age in place, making some upgrades now, such as putting guardrails or handrails on stairs, may help smooth the transition if and when your health declines.

LWA/Dann Tardif/Getty Images

Finding a place to live in retirement won’t look the same for everyone, noted Susan Reinhard, senior vice president and director of the AARP Public Policy Institute.
Notably, there is no one-size-fits-all answer. While some people may downsize, others may want more room to accommodate grandchildren. “It’s called right sizing for you,” Reinhard said.
While deciding where to live, people would also be wise to make other provisions for their care, including establishing or updating advance directives, which are legal documents that express your wishes in the event you are no longer able to care for yourself.
It’s also helpful to create medical records and to have conversations with family members who you would want to help in the event you need medical attention, Reinhard noted.

2. Come up with a Medicare strategy

— Key deadline to watch: Your 65th birthday.
While you may start your Social Security retirement benefits as early as age 62, eligibility for Medicare generally does not start until age 65.
An initial enrollment period starts three months before you turn 65, includes your birth month and goes three months after the month you turn 65, for a total of seven months.
That goes for Medicare Part A, which covers inpatient hospital care, skilled nursing facility care, nursing home care, hospice care and home health care, as well as Medicare Part B, which covers diagnostic and preventive care services.
A small portion of people may be automatically enrolled if they are already receiving Social Security benefits, noted Jane Sung, senior strategic policy advisor at the AARP Public Policy Institute.
For others, their 65th birthday, and the surrounding months that make up their initial enrollment period, are a key date to watch.
“Don’t wait until the last week of your initial enrollment period, because it is complex,” Sung said.

If you’re still working and have health care coverage through an employer, you may decide not to sign up right away when you turn 65, she said.
Those who opt for traditional Medicare may also want to add Medigap plans, which can help cover out-of-pocket costs, or Medicare Part D, for prescription drug coverage.
Alternatively, people may opt for Medicare Part C, otherwise known as Advantage plans, which are offered through private insurance and include Medicare Parts A and B, and oftentimes other coverage areas.
To help sort through the choices, the AARP offers a Medicare enrollment guide and other resources.
State Health Insurance Assistance Programs, also known as SHIP, also provide guidance to Medicare beneficiaries.
In addition, some people may qualify for financial help through Medicare savings programs if they have income or resources below certain limits.
The key is to be proactive and do your research.
“Certainly, I think six months, four months before your 65th birthday is a great time to start thinking about learning more about Medicare and the different choices available out there,” Sung said.

3. Choose when to claim Social Security benefits

— Key deadline to watch: By age 60, you should go to the Social Security Administration website and review your statement, recommends Copeland.
When to claim Social Security retirement benefits is one of the big questions retirees face.
Most experts generally recommend waiting beyond age 62, the earliest eligibility age. At full retirement age — 66 to 67, depending on your date of birth — you will receive 100% of the benefits you earned. But for every year you delay past full retirement age up to age 70, you will get an 8% boost — a guaranteed return that’s hard to beat in the markets or elsewhere.

Sporrer/Rupp | Image Source | Getty Images

It’s important to note those benefits are also inflation-adjusted, unlike most other sources of income, explained John of the AARP Public Policy Institute.
“The later you can file for Social Security, the better it is as far as the amount you’re going to get,” John said.
By your early 60s, you should be reviewing your earnings record to make sure it’s correct, Copeland said, as that is what will be used to calculate your benefits.
At that time, you will also be able to get a sense of how large your monthly benefit check will be if you claim at ages 62, 67 (provided that’s your full retirement age) and 70.

4. Check if you can save more

— Key deadline to watch: Check in at least 10 years away from retirement.
For many people, the idea of retirement doesn’t become a reality until around age 45, according to John.
By the time you’re about a decade away from retirement, it’s a good idea to give some serious thought to your retirement goals while you’re still working and have time to build up your savings and make other arrangements, he said.
Even so, no matter where you are in relation to retirement, you can still make progress.
“It’s never too late to start,” John said. “Having any level of savings is better than having no savings at all.” More