Depending on your age you will have different legal options available in your retirement planning. Let’s be honest, when it comes to retirement planning you need to take advantage of every break you can get.
Not only that, when it comes to issues like Social Security, Medicare, and IRA withdrawals you have certain deadlines that you must meet. If you don’t act before some of the deadlines you could pay fees and penalties, or at the least miss out on benefits that you should take advantage of.
So when you reach these 6 different retirement planning ages, be sure to maximize the options that will then be available to you.
Let’s get started!
Retirement Planning Age 50
When you reach age 50 you will have the ability to legally contribute more funds into your IRA and 401(k). For 2015 the IRA contribution limit is $5,500, but once you reach age 50 or older you can contribute $6,500.
For 401(k)’s the contribution limit is $18,000, but once you reach age 50 or older you can contribute $24,000.
Retirement Planning Age 55
A lot of people don’t realize that if you leave your employer in the calendar year you turn 55 or later then you can take money from your 401(k) penalty free. You don’t get this privilege with IRA’s. However, I wouldn’t necessarily recommend withdrawing funds that early just because you can get your hands on it penalty free. These are retirement funds, so unless it’s an emergency it is best to let them keep growing tax deferred until you retire.
Retirement Planning Age 59 ½
This is the age most people know about because you can finally pull funds out of your IRA penalty free. You’ll still pay applicable taxes on traditional IRA’s, but there will be no 10% penalty. Also, you are not required to make withdrawals just yet. It’s optional.
Retirement Planning Age 62
This is the age you are first eligible for Social Security. Of all ages to begin drawing Social Security, the most popular age is 62. However, if you draw at this age you will receive reduced benefits. If you wait longer before drawing benefits your monthly income will be higher. Your benefits will grow for each year you delay drawing them, up to age 70. So be sure to carefully consider your options.
Retirement Planning Age 65
This is another milestone year most people know about. It’s when you are first eligible for Medicare. If you are already drawing Social Security then you will automatically be enrolled in Part B. If you are not drawing Social Security yet then you need to tell Medicare to begin Part B when you turn 65. If you don’t do this there will be a 10% penalty assessed against you for each 12-month period you did not enroll.
Also, as a side note, when you activate your Part B (usually this is done at age 65) you have 6 months to purchase any Medicare Supplement that you want with no health questions asked. So if you have pre-existing conditions and want a supplement, be sure to get it within 6 months of enrolling in Part B.
Retirement Planning Age 70 ½
Once you reach 70 ½ you will have to take Required Minimum Distributions (RMD’s) from your IRA. You’ll also have to take them from your 401(k) unless you are still working. If you don’t take the RMD’s by the deadline you will have to pay a 50% penalty on the amount you were supposed to withdraw. Ouch!
When you reach these 6 retirement milestones be sure to take the appropriate action. You don’t want to have penalties assessed against you needlessly. And you don’t want to miss out on legal benefits that are yours to claim.
If you are approaching any of these retirement milestones and need some advice, then feel free to reach out to me. You can send me an email and ask a question at [email protected].
Or you can get on my calendar for a 20 minute phone conversation and ask me your questions. All you have to do is go to meetme.so/chrishammond to claim a spot that is convenient for you. I’ll help point you in the right direction.
And if you know anyone that is approaching any of these 6 retirement milestone ages, be sure to send this article to them to help them out. We can all make a bigger impact helping each other together than I can by myself.
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Best of luck!