Age 50: You are allowed to save extra money in many retirement plans (i.e. IRA, 401(k)) when you turn 50. The term used is catch-up provision.
Age 55: Health Savings Accounts catch-up provision starts. Under certain circumstances, penalty-free distributions may be taken from certain retirement plans if you are retired.
Age 59-1/2: Distributions may be taken without penalty from IRAs and other qualified retirement plans, Roth IRAs need to be opened at least five years.
Age 60: If you are a widow or widower, you may claim early Social Security benefits under your spouse’s earnings record.
Age 62: Early Social Security benefits may be received under your earnings record. However, there is a significant penalty for not waiting until your full retirement age; we recommend waiting until your full retirement age (FRA or later if possible.
Age 65: Age to file for Medicare benefits unless covered by a qualified group plan. If you need help, our long-term care consultant is available to speak with you.
Age 66/67: Full retirement age (FRA) to receive Social Security benefits.
Age 70: If you are able to wait until age 70 to apply for Social Security, your benefits are enhanced by 6-8% for every year you delayed by applying from your FRA. A nice no-risk return on your investment!
Age 70-1/2: Required minimum distributions begin (RMD). The government says they have waited long enough to be paid the taxes on your retirement savings and earnings. Remember you saved this money pre-tax. Now you must begin withdrawals annually taxed as ordinary income. There is a significant penalty for not withdrawing annually (an additional 50% of the taxes due). We send you a letter for accounts we manage held at TD Ameritrade with the amount of your RMD (does not include Roth IRAs since those contributions are after-tax).
If you would like to discuss any of these issues as you approach these important birthdates, please don’t hesitate to contact us.