Two Half-Birthdays Are Meaningful for Retirement Planning
Have you ever noticed how little kids always announce their ages in half-years? “I’m 4 and a half!” Maybe you remember doing the same thing when you were a kid. Kids always want to be older than they are.
At some point though, kids stop announcing their half birthdays. Then there comes a time when people wish they could start turning back the hands of time. After that, as you get closer to retirement age, especially if you are well prepared for that event, you start to feel like a kid again and want to be older faster. And at 59 and 79 years of age, you’ll begin to realize that half-birthdays become more meaningful.
Seven Important Ages for Effective Retirement Planning
Retirement is different for everyone. However, no matter when you do retire, certain ages are important to keep in mind. While things may change, as it stands right now, ages 50, 59.5, 62, 65, 66, 70 and 70.5 are important in order to optimize the benefits you receive.
- At age 50 you are eligible to begin making catch up contributions to your 401(k) or IRA.
- At age 59.5 the early withdrawal penalty goes away, so you can make withdrawals from your IRA or 401(k) without having to pay a 10% penalty.
- Age 62 is currently the earliest you can start collecting your Social Security benefits. Fact is, just because you can doesn’t mean you should. If you wait until full retirement age (currently age 66) you’ll get 75% more in your paycheck than you will if you collect at 62.
- Age 65 is the year you can enroll in Medicare. You can actually enroll three months prior to your 65th birthday, which is a good idea so you don’t miss open enrollment.
- If you were born before 1954, age 66 is, as mentioned earlier is the current Full Retirement Age (FRA) for Social Security. If you were born after 1954 but before 1969, you’ll have to wait a little longer. And those born 1960 and later will have to wait until age 67.
- Age 70 is the latest you can claim your Social Security Benefits. However, if you do forget, you can get up to 6 months of retroactive checks when you do claim your benefits.
- And, finally, 70.5 is when the IRS has mandated that you must begin to withdraw the minimum amount from your tax-deferred accounts without being penalized.
Plan Well and Enjoy Retirement with Childlike Enthusiasm
Like most important life decisions, retirement can be full of wonderful experiences when well planned. The earlier you begin planning for retirement and the longer you stick to your plan, you can look forward to feeling a childlike enthusiasm when you get there! You probably won’t go back to announcing your age in half-years again, but you could!
This content is provided for informational and educational purposes only. The information, analysis and opinions expressed herein reflect our judgment as of the date of writing and are subject to change at any time without notice. They are not intended to constitute legal, tax, securities or investment advice or a recommended course of action in any given situation. All investments carry a certain risk and there is no assurance that an investment will provide positive performance over any period of time. Information obtained from third party resources is believed to be reliable but not guaranteed. Past performance is not indicative of future results. Edward Storer offers investment advisory services through Dynamic Wealth Advisors.