Quiz: Which Birthdays Are Financial Milestones?
When it comes to your finances, some birthdays are more important than others. Take this quiz to see if you can identify the ages that might trigger financial changes.
1. Eligibility for Medicare coverage begins at what age?
2. A child can stay on a parent’s health insurance plan until what age?
3. At this age individuals who are making contributions to a traditional or Roth IRA or an employer-sponsored retirement plan can begin making “catch-up” contributions.
4. This age is most often associated with drops in auto insurance premiums.
5. Individuals who have contributed enough to Social Security to qualify for retirement benefits become eligible to begin collecting reduced benefits starting at what age?
6. To obtain a credit card, applicants under this age must demonstrate an independent ability to make account payments or have a cosigner.
1. b. 65. Medicare eligibility begins at age 65, although people with certain conditions or disabilities may be able to enroll at a younger age. You’ll be automatically enrolled in Medicare when you turn 65 if you’re already receiving Social Security benefits, or you can sign up on your own if you meet eligibility requirements.
2. c. 26. Under the Affordable Care Act, a child may retain his or her status as a dependent on a parent’s health insurance plan until age 26. If your child is covered by your employer-based plan, coverage will typically end during the month of your child’s 26th birthday. Check with the plan or your employer to find out exactly when coverage ends.
3. a. 50. If you’re 50 or older, you may be able to make contributions to your IRA or employer-sponsored retirement plan above the normal contribution limit. These “catch-up” contributions are designed to help you make up a retirement savings shortfall by bumping up the amount you can save in the years leading up to retirement. If you participate in an employer-sponsored retirement plan, check plan rules–not all plans allow catch-up contributions.
4. b. 25. By age 25, drivers generally see their premiums decrease because, statistically, drivers younger than this age have higher accident rates. Gaining experience and maintaining a clean driving record should lead to lower premiums over time. However, there’s no age when auto insurance rates automatically drop because rates are based on many factors, including type of vehicle and claims history, and vary by state and insurer; each individual’s situation is unique.
5. a. 62. You can begin receiving Social Security retirement benefits as early as age 62. However, your benefits will be reduced by as much as 30% below what you would have received if you had waited until your full retirement age (66 to 67, depending on your year of birth).
6. c. 21. As a result of the Credit Card Act of 2009, credit card companies cannot issue cards to those under age 21 unless they can show proof that they can repay the debt themselves or unless someone age 21 or older with the ability to make payments cosigns the credit card agreement.
What is the birthday rule?
The birthday rule may be used by health insurers to coordinate benefits when a dependent child is covered by the health plans of both parents and the parents are married or living together. The plan of the parent whose birthday falls earlier in the calendar year is generally the primary plan, providing benefits and paying claims first, and the plan of the other parent provides secondary coverage. If the parents share the same birthday, primary coverage is provided by the plan that has covered one parent the longest.
Source: National Association of Insurance Commissioners, naic.org