Ready for the inside scoop? Here are a few essential deadlines that will help you maximize your ability to save on taxes, avoid government penalties and capitalize on fees while you’re on your way to retirement.
If you’re retired police, medic, and/or firefighter, you can take penalty-free distributions from your plan at age 50, providing you’ve completed at least 20 years of service.
At this age you can start contributing $23,000 into a retirement plan (ie. 401 k) which is $5,500 more than workers who are 49 and younger. If you haven’t allocated enough money to your retirement plan, think about catching up with this option. You can also start investing an extra $1,000 into your IRA (Individual Retirement Plan)
When you turn 55, you can withdraw money from your 401(k) without paying the 10% early withdrawal fee. You can only withdraw from the 401(k) associated with your most recent employer.
Age 59 1/2
Yes, you should celebrate your half birthday for more than one reason. At this age you can withdraw from your IRA without paying the 10% early withdrawal fee, and from any 401() account (not just the one associated with the job you most recently left)
You have arrived because at this age you are eligible to collect Social Security payments. Beware, however, if you begin collecting at this early age, your payments may be reduced by up to 30%.
At 65 you are eligible for Medicare. This is an important date to remember because if you sign up later your premiums could be higher, and you could be denied supplemental coverage.
Quick tip: You can sign up 3 months before your birthday to claim your medical coverage.
If you were born within 1942 to 1954 you are eligible to collect full Social Security payments when you turn 66.
If you were born in 1960 or later, your Social Security full retirement age is 67.
Something to think about: Your payments will increase by 8% per year ever year that you delay collecting benefits until age 70.
70 marks the final year in which you can delay collecting Social Security benefits and still receive that 8% increase.
Age 70 1/2
This is the age where you must take mandatory distributions from your traditional IRA and 401(k).
Read more about this at fool.com.
Hopefully, you have jotted down some notes to remember these important dates as you enter retirement.
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Kenneth G. Marks has been practicing personal injury law since he was admitted to the California Bar in 1981.