11 Key Milestones to Help Prepare for Retirement
Do you know how many retirement-related ages and deadlines you need to prepare for? When it comes to retirement milestones, there’s rarely one correct answer. The federal government may move targets or use different variables that may seem confusing. For example, a few years ago, the age at which many people are required to start withdrawing money from most types of retirement accounts, was bumped from the year you turn 70½ to the year you turn 72. And more recently, it has changed again, and it’s not the same age for everyone. To help you prepare now, here’s a list of key milestones to help you plan for retirement:
1) Age 50: Retirement catch-up contributions. Getting a late start contributing to your 401k? If your 50 or older you get a higher contribution limit. The base contribution limit for most workplace retirement accounts is $22,500 a year. Because of this age, you are allowed an additional $7,500 for a total of $30,000!
2) Age 55: Healthcare Spending Account (HSA) catch-up contributions. Catch-up again with HSA contributions, a savings or investment account where you reimburse yourself for eligible medical expenses — an additional $1,000 each year.
3) Age 59½: Retirement account penalty-free withdrawals. At this age, money in your retirement accounts can be tapped early for purposes other than retirement, but it’s not a choice to make lightly. Early withdrawals from individual retirement accounts (IRAs) are generally subject to a 10% tax penalty.
4) Age 60: Social Security survivor’s benefits. Family members of people who have passed away, are eligible to receive benefits at the time of their death. At age 60, you can generally start receiving these survivor benefits.
5) Age 62: Early Social Security retirement benefits. If you qualify for Social Security retirement benefits based on your own earnings history, or that of a spouse or ex-spouse, you can start receiving those benefits. However, keep in mind that your benefit will be reduced before you reach full retirement age.
6) Age 64¾: Medicare benefits enrollment. The one-time enrollment period for Medicare begins around age 64¾. It’s important to enroll during this age, or a delay in Medicare benefits and hefty financial penalties will result.
7) Age 65: Medicare benefits begin. If you sign up for Medicare in the first three months of your initial enrollment period, your Medicare benefits generally will begin the month you turn 65.
8) Age 66 to 67: Full retirement age for Social Security. The amount of your Social Security benefit is based on when you start taking it. To get your full benefit, you need to reach your full retirement age based on when you were born, according to Social Security guidelines.
9) Age 70: Maximum Social Security benefit. You also can wait until after your full retirement age to claim Social Security — until as late as age 70 — and receive a higher benefit as a result. That’s more than the benefit you’d get at your full retirement age. For every year you hold off past full retirement age, your benefit will jump by as much as 8%.
10) Age 73-75: Required minimum retirement distributions. A minimum amount of money that you generally must withdraw from most types of non-Roth retirement accounts each year, starting the year you reach a certain age. The start age is 73. If you are not 74 or older by the end of 2032, the start age is 75.
11) Age 73+: Qualified charitable distributions. Once you take your Required Minimum Distribution (RMS) from your retirement plan, you can count charitable donations as part of it, provided you follow the rules. This is known as a qualified charitable distribution (QCD) and it allows you to exclude up to $100,000 in gross income from taxes each year.
Want to find out more about the transitions you may face during retirement, and how to better prepare for this new life? Don’t miss our upcoming webinar, Three Transitions to Retirement on Tuesday, May 23, from 6:00 – 7:00 PM EST. Attendance is free and open to everyone! To reserve your virtual seat, click here.
Resources:
MoneyTalkNews.com
