Important
Birthdays to Remember
Certain
ages represent turning points in life: driving at 16, voting at 18,
less-expensive auto insurance at 25.
On the
road to retirement, there are important birthdays, too. Your tax situation,
retirement benefits, and health-care benefits are closely tied to specific ages.
If you are not aware of them, you could miss out on potential opportunities and
deadlines.
You may
want to mark these noteworthy ages on your long-term calendar.
59½ —
Penalty-free withdrawals from employer-sponsored retirement plans, IRAs, and
most annuities are allowed, provided certain conditions are met. Ordinary income
taxes will be due on the amount withdrawn (qualified Roth IRA withdrawals are
free of federal taxes). Withdrawing money from most tax-deferred retirement
plans prior to age 59½ typically results in a 10 percent federal income tax
penalty in addition to ordinary income taxes.
62 —
Workers may elect to begin receiving a reduced percentage of their full Social
Security benefits. However, to receive 100 percent of Social Security benefits,
workers must wait until reaching "full retirement age," which is 65
for those born in 1937 or earlier. Full retirement age gradually increases to 67
for people born after 1937, depending on the year of birth.
65 —
Eligibility begins for enrollment in Medicare. The federal health insurance
program charges monthly premiums that vary with certain coverage levels. Many
companies do not extend health insurance benefits to retired workers, so it's
important to understand your Medicare options.
70½ —
Distributions from traditional IRAs and most employer-sponsored
plans must begin or penalties will be assessed. Required minimum distributions
are calculated according to life expectancies set by the federal government. The
penalty for failing to withdraw the required amount is 50 percent of the amount
that should have been withdrawn.
As you
consider retirement, be aware of the important decisions that come with age. We
can help you evaluate your options as you plan for these milestones.
