• Age Milestones on the Path toward a Successful Retirement

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    Milestones on the Path toward a Successful Retirement




    Age 50:  Catch-up contributions.  Those holding tax-deferred retirement savings accounts such as IRA’s, 401(k)’s and 403(b)’s become eligible to contribute larger amounts to help them “catch up” prior to retirement.

    Age 55:  You may withdraw from your most recent 401(k) plan without paying the 10% penalty if you are separated from service. Note that all withdrawals are fully taxable at your ordinary income rate.

    Age 59 1/2:  You may withdraw from IRA’s without penalty.  Withdrawals are fully taxable at your ordinary income rate.

    Age 60:  A widow or widower may begin drawing a reduced survivivor benefits as a suriviving spouse, and can change to their own benefit later.

    Age 62:  Earliest age to claim your own Social Security benefit, reduced by 25% from the full benefit you would receive at Full Retirement Age.

    Age 65:  Eligible to enroll in Medicare from 3 months prior to your birth month until 3 months after.  If you miss this window, there is open enrollment from January to March each year.  You will pay a higher premium for delaying enrollment.   If you are still covered by your employer’s plan when you reach age 65, you may be able to defer enrollment until you stop working, without incurring a delay penalty.  Generally, the special enrollment period runs until 8 months after your employment ends.

    Age 66-67:  Full retirement age (FRA).  If you collect at FRA, you receive your full benefit, or “Primary Insurance Amount,” based on your . highest-earning 35 years.  If you were born from 1943-54, your full retirement age is 66.  If you were born from 1955-60, add two months for each year after 1954.   If you were born in 1960 or later, your FRA is 67.  For more details see “Understanding Social Security.”

    Age 70:  The latest age at which you might wish to delay receipt of benefits.  If you wait until age 70 to receive benefits, the amount will be 32% higher than your benefit at FRA.

    Age 70 1/2:  Required minimum distributions (RMD) begin for tax-deferred accounts including traditional IRA’s, SEP-IRA’s, and employer plans such as 401(k), 403(b), 457 plans.  You can delay the first distribution until April first of the year following the year you turn 70 1/2.  However, may not be advisable to delay, because you would need to take a second distribution in that same year.  If you are still employed, you can delay distributions until retirement for some employer-sponsored plans as long as you are not an owner of more than 5% of  the company. Note:  If you fail to take sufficient RMD, the tax penalty is 50% of the amount that should have been taken.

    Age 75:  For those with pre-1987 contributions in a 403(b) plan, those amounts become subject to RMD.

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