You will often hear that retirement planning should begin when your career does, and then continue consistently throughout your working years. But even with steady, determined saving, you should remember these eight important milestones and learn what to do at each of them.
Age 50. When you turn age 50, you are now eligible for “catch up” contributions to your retirement plan. This year, you can save an additional $6,500 in your 401(k) or equivalent account, enjoying the same tax benefits as regular contributions. You can also stash an additional $1,000 in your IRA if you have one.
Age 55. Beginning at age 55, you can take penalty-free withdrawals from the account associated with your most recent job. That means you can avoid the 10 percent early withdrawal penalty, but you will still owe regular income taxes.
Age 59 ½. Now, you can enjoy withdrawals from your IRA without triggering a penalty.
Age 62. This is the earliest age at which you can claim your Social Security benefits. Sometimes this makes sense, but remember that your benefits will be permanently lower than they would have been at full retirement age.
Also, keep in mind that some of your benefits can be withheld if you’re still working and earning above the annual earnings limit
Age 65. Medicare eligibility begins now. Remember to sign up on time, or else you could end up paying higher premiums if you miss the deadline.
Age 66-67. These are the current “full retirement ages” established by Social Security, depending upon the year of your birth. Once you reach full retirement age, you can claim your full scheduled benefits. You can also work while receiving benefits, without any money withheld from your checks.
Age 70. If you wait until this age to claim Social Security, your benefits check will be boosted by about 8 percent for each year that you waited beyond full retirement age. But there’s no benefit to waiting any longer past age 70, so make sure to file your claim.
Age 72. Normally, this is the year in which you must begin taking distributions from your retirement account. Currently, a special exemption exists regarding this rule.
If you need help at any of these milestones, give us a call. We can clarify the procedures you should be following, and help you make important decisions at these important times.