This article adheres to strict editorial standards. Some or all links may be monetized.
Turning 65 in the U.S. means finally being able to rely on Medicare covering most of your health expenses. But before you join the 67 million Americans enrolled in this program, it’s important to understand what’s covered and what’s not.
If you have already been receiving Social Security benefits for at least four months when you turn 65, you’ll automatically be enrolled for Medicare Part A — but you will need to sign up for Part B and other coverage for yourself.
Must Read
- Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don’t have to deal with tenants or fix freezers. Here’s how
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and 3 simple steps to fix it ASAP
- No time to lower your crippling car insurance rate? Here’s how to do it within minutes — you could end up paying $29/month without a single phone call
Navigating the rules around Medicare can feel overwhelming — especially when mistakes can end up costing you dearly. You could easily overlook important deadlines and end up with gaps in your coverage, higher out-of-pocket costs, or even miss out on advantageous tax breaks.
And when you’re living on a fixed income, the last thing you want to do is leave money on the table. Here are three costly Medicare mistakes and how to avoid them.
Choosing coverage without research
Medicare and Medicare Advantage plans have a number of differences. Not understanding these means you could be overpaying for a plan that’s filled with features you don’t need.
Medicare plans are offered by the government and designed for those aged 65 or older or qualifying individuals with certain disabilities. Private health insurance companies offer Medicare Advantage plans for those age 65 and up.
If you are on the cusp of retirement and are wondering about your healthcare expenses or your ability to meet your out-of-coverage needs, getting ancillary health insurance can ease your worry.
Before signing up for any plan, ask to see the plan’s current formulary, which is a list of the medications a plan covers. And be sure to confirm if your doctor and providers are covered under a potential plan.
Not looking over whether your current doctor and preferred providers are covered under the plan you choose could end up costing you thousands of dollars in out-of-pocket costs.
Read more: Warren Buffett used 8 solid, repeatable money rules to turn $9,800 into a $150B fortune. Start using them today to get rich (and stay rich)
Not budgeting for out-of-pocket expenses
Taking care of yourself during old age can be difficult for many, especially if you have a disability or chronic illness. According to the Administration for Community Living, Americans turning 65 today have a roughly 70% chance of needing long-term care services in some capacity during their golden years. However, Medicare typically doesn’t cover long-term care in a nursing home.
With costs skyrocketing, making other arrangements like getting long-term care insurance can ease the burden on your finances, making sure your nest egg doesn’t take a direct hit.
As of 2025, the cost of a private room in a nursing home averages around $12,775, while the median cost of a semi-private room is $11,133.
You can also get term life insurance to ensure your loved ones are taken care of after your passing.
Ethos Insurance offers fast and affordable term life insurance with flexible coverage options within just five minutes.
You can get a policy with up to $2 million in coverage starting at just $2 per day. The best part? You don’t need any medical exams or blood tests to get qualified.
Eligible policies with Ethos can also get a free legal will.
Not having an emergency fund
If you want a low-risk option to invest your discretionary funds, consider investing in a certificate of deposit (CD). The rates offered on CDs are typically higher than standard rates offered on saving accounts, but the money remains locked in during the term of the deposit.
If you’re looking for safe, high-return options, certificates of deposit (CDs) are a great choice.
A CD is a low-risk savings option that can yield interest comparable to, or even higher than, the top savings accounts. The trade-off for this higher rate is that your money stays locked in the account for a set period.
If you want your funds to remain accessible, consider opening a high-yield cash account.
To get started, a high-yield account, such as a Wealthfront Cash Account, can be a great place to grow your emergency funds, offering both competitive interest rates and easy access to your cash when you need it.
A Wealthfront Cash Account can provide a base variable APY of 3.50%, but new clients can get a 0.65% boost over their first three months for a total APY of 4.15% provided by program banks on your uninvested cash. That’s over nine times the national deposit savings rate, according to the FDIC’s November report.
With no minimum balances or account fees, as well as 24/7 withdrawals and free domestic wire transfers, you can ensure your funds remain accessible at all times. Plus, Wealthfront Cash Account balances of up to $8 million are insured by the FDIC through program banks.
Cashing out your equity
One of the creative ways to help fund expenses in your retirement is through a reverse mortgage, which allows you to tap into your home’s equity to cover expenses like travel, healthcare, and daily living.
Many homeowners aged 65+ have a median home equity of over $250,000, according to the National Council on Aging. This is quite substantial.
A reverse mortgage can help you pay off substantial debt or fund renovations. You can choose to borrow the funds as a lump sum or fixed monthly payment and can spend it however you want.
The reverse mortgage becomes due once the borrower passes away, stops using the home as their primary residence or sells the property.
You can check out the Moneywise list of industry-leading companies offering reverse mortgages here.
Compare offers instantly and request a free information guide to help you understand how to get started.
What To Read Next
- Here’s why wealthy investors are pouring millions into this 1 US asset class — and how to quickly copy the move while there’s still time
- Robert Kiyosaki says this 1 asset will surge 400% in a year — and he begs investors not to miss its ‘explosion’
- Savvy investors are using 5 stealthy alternatives to safeguard their portfolios — here’s how to build wealth in 2026 even if trillions vanish from US stocks
- Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
Join 200,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.