Which Ages Are Important for Retirement Planning
Whether you are retiring tomorrow or in twenty years, it is important to take note of important planning milestones. Understanding when certain benefits become available, change, or expire will help you plan accordingly and allow you to maximize your retirement to its fullest.
Age 50 – For 2020, you can increase contributions to your retirement plans to help “catch-up” on your retirement goals. Workplace plans allow $6,500 in additional annual contributions while Individual Retirement Accounts (IRA) allow an additional $1,000.
Age 55 – Now you may contribute an additional $1,000 to a Health Savings Account (HSA), one of the most tax-advantaged plans available. Additionally, you may roll a retirement account into an IRA if you are currently employed or distribute funds without penalty from a previous employer retirement account.
Age 59.5 – After years of saving for retirement, reaching this milestone finally allows you to withdraw funds without the federal 10% penalty (income taxes will apply, however).
Age 62 – Reaching this landmark means you are now able to claim Social Security benefits. However, make sure you have carefully evaluated your income needs. Claiming now will reduce your eligible benefit in comparison to waiting until a date a few years later up until age 69.
Age 65 – Three months before your 65th birthday is an important date, regardless of whether you plan on retiring or not. This when you are eligible to enroll in Medicare benefits. Mark your calendar as failing to enroll could result in increased monthly premiums.
Age 66-67 – If you were born between 1943 and 1954, age 66 marks the age you are eligible to receive your full Social Security benefit. Birth years between 1954 and 1959 receive full benefits at different times throughout your 66th year. Those born 1960 and later will have to wait until their 67th birthday to receive full Social Security benefits.
Age 70.5 – Halfway through your 70th year is when the IRS begins requiring distributions from qualified retirement accounts. After all, you’ve enjoyed some great tax benefits for years and now the IRS wants their cut.