When one thinks about their retirement, images of lounging poolside while sipping on a tropical beverage often come to mind. But retirement is not all relaxation and leisure. Before reaching this important milestone, there are other benefits occasionally neglected. Here are a few target dates to remember when approaching retirement.
50
When you turn 50, you’re eligible to defer taxes on 401(k) and 403(b) plans up to $23,000.
55
At age 55 certain individuals are permitted to obtain distributions from their funds early and without a 10% penalty. This occurs only from company plans like a 401(k). However, this exception does not include IRAs.
59 1/2
After age 59 ½, the standard 10% early withdrawal penalty on retirement accounts no longer applies.
62
62 years old is the age workers first become eligible to collect Social Security. But that perk is not without its drawbacks. If one chooses to cash in at 62 for Social Security payments, the overall amount reduces by about 25%. If possible, it’s often wise to wait.
65
Additionally, 65 is the age of eligibility to start collecting Medicare.
66-67
Either age 66 or 67, depending on one’s year of birth, marks the “full retirement age. This is where there is no longer a penalty to begin collecting Social Security.
70
After turning 70, there is no more incentive to delay receiving Social Security benefits.
70 1/2
At 70 ½, you must start withdrawing from your retirement account. Based on overall available funds and life expectancy, you can calculate your Required Minimum Distributions (RMDs). Skipping an RMD results in a major penalty, amounting to a 50% excise tax.
Are you ready for your own retirement target dates? Share your experiences in the comments below.
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Comments
Linda on November 14, 2015 at 10:01am
Thank you for the retirement age info. I have a question. What if some of us worked at jobs but because of starting a family we might have worked at places like walmart, gas stations, jobs you could find to make ends meet, but would quit to raise a child to school age and then get a job for awhile and have another child, stopping working for 5 or six years. No planning for retirement until now that i am 57 i know that the older a person becomes being able to work physically becomes harder. What advice do you have for someone like me. I hope it is never to late to plan but would like you to give me some advice on what i need to do or could or should do. In appreciation. Thank you
A S. on November 14, 2015 at 2:33pm
Taking social security at age 62 reduces "to" about 25%? Shouldn't that say reduces "by" about 25%? Big difference!
Bob on November 15, 2015 at 10:43am
At 57 you should keep your job you now have as long as possible - use the company 401K matching funds offer if available. Keep a line in the water for a new job that is less physically demanding as who knows what the future holds.Cut recurring expenses.This time of life is as exciting as being a 20 year old out on your own for the first time - with the help of family and outside social contacts it should be a fun time!
Bee on November 24, 2015 at 7:06am
I am 66 yrs old and work a part-time job on the weekends. I am collecting social security and would like to know if I can advise my employer to stop taking social security out of my check?
Harry on November 30, 2015 at 2:37pm
If I read it correctly it does say reduces by 25%.