In order to maximize your retirement benefits, it is important to meet certain deadlines. If you don’t take action on these age-based cut-off dates, you can trigger penalties, fees, and miss out on extra benefits for social security, IRAs, 401(k)s, and other retirement accounts. Make sure you take these important ages for retirement into account when planning for retirement.
- Age 50: If you are older than 50, you can contribute more to your retirement accounts. For a 401(k), 403(b), and Thrift Savings Plan, you can contribute $5,500 more (up to $23,000), and for IRAs, you can contribute $1,000 more (up to $6,500 for 2014) than those under 50.
- Age 55: If at 55 or over you leave your job, you can take 401(k) withdrawals for the respective job without having to pay the 10% penalty. If you choose to roll it into an IRA however, you will have to wait until you reach 59 ½.
- Age 59 ½: At this age you can take money out from any 401(k), 403(b), or IRA without the 10% penalty but will still be responsible for income taxes with the distribution.
- Age 62: At this age you can start receiving Social Security benefits. If you choose to receive it at this age however, it can be up to 30% less than taking benefits at your full retirement age. As I mentioned last week, if you are still working and collecting benefits, part of your benefits will be withheld temporarily.
- Age 65: Three months before you hit 65 you can sign-up for Medicare Part A and/or B with coverage starting the month you turn 65. Eligibility ends three months after. You may have to pay a higher premium for late enrollment in Part A and/or a higher premium for late enrollment in Part B, or even be denied supplemental coverage. You also have an 8-month Special Enrollment Period to sign up for Part A and/or Part B that starts the month after you leave a job with a group health coverage.
- Age 66: If you were born between 1943 and 1954, you can collect unreduced Social Security benefits at 66. If you were born in 1955, the full retirement age is 66 and two months. It increases in two-month increments for every year until 66 and ten months for those born in 1959. Once you hit your full retirement age, you can work and collect benefits at the same time without any of the benefits being withheld.
- Age 67: If you were born in 1960 or later, this is your full retirement age. Visit artofthinkingsmart.com for more information.
- Age 70: If you delay taking benefits until you reach 70, your payments will increase by 8% per year. There is no extra benefit after age 70.
- Age 70 ½: If you have a traditional IRA or a 401(k), you have to take your required minimum distributions at 70 ½. If you are still working however you can delay the RMDs until April 1 of the year you retire, unless you own 5% of the company. Also once you are over this age, you can no longer get a tax deduction for traditional IRA contributions.
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