The 9 most important ages for retirement planning


Life is full of iconic benchmark birthdays, some we gleefully anticipate, others we foolishly dread:

  • Eighteen ‘ Legal adulthood ‘ sort of.
  • Twenty-one ‘ Let’s have a (legal) beer!
  • Thirty ‘ Where did my youth go?
  • Forty ‘ Lordy, lordy!

And, of course”¦

65 ‘ Aren’t you retiring this year?

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But these aren’t the only important birthdays. When it comes to planning and managing your retirement resources, you need to keep a near constant eye on the calendar as important programs and rules kick-in at various ages.

Here are some significant birthdays that may require your attention!

50 ‘ Starting at the half-century mark, you can stash an additional $6,500 per year in your 401(k) and an extra $1,000 in your IRA.  These higher limits are appropriately called “catch-up” provisions.

55 ‘ If you leave your job in the calendar year you turn 55, you can start taking withdrawals from that company’s 401(k) without paying the 10% early withdrawal penalty.  But don’t roll that dough into an IRA.  That will make it subject to early withdrawal penalties until you are”¦

59 ½ — You are now free to take money out of your 401(k) or traditional IRA without penalty.  However, this money is subject to income tax.  (Roth IRA withdrawals are not taxed because you took that hit back when you put the money in that account.)

62 ‘ You can start taking Social Security.  But think carefully about doing so. Starting now will permanently reduce your benefits by 30%.  If you take a part time job while getting Social Security at this age your benefits might be reduced or suspended, depending on how much you earn at work. Here’s a calculator that will help you understand how to maximize your Social Security benefits.

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65 ‘ Big birthday, of course!  You can sign up for Medicare as early as three months before you hit the big 6-5 with coverage starting as soon as your 65th birthday.  Make sure you take care of this one.  If you don’t sign up on time your premiums could be permanently raised.

If you retire before 65 you will likely need to get health insurance via the Affordable Care Act insurance exchanges.  Brace yourself for that process.  The prices are absurdly high and headed up.  Expect to pay about $800 per month for modest, high-deductible coverage for you and your spouse.

66 ‘ If you are a Baby Boomer, you will reach your “full retirement age” at some point in this year.  The oldest Boomers hit that mark at age 66 and 2 months.  Those born in 1959 will have to wait until they are 66 and 10 months.  But it’s worth the wait as this is the age when you can start to receive unreduced Social Security payments.  And those benefits will no longer be reduced if you work.

67 ‘ Full retirement age kicks in for those born in 1960 or later.

70 ‘ Your Social Security benefits will increase about 8% every year that you delay taking them up to age 70.  If you haven’t started getting your benefits, start now.

70 ½ — Time to break into that nest egg if you haven’t already.  You must start taking distributions from your 401k or traditional IRA.  If you are still employed at this age, you have until April 1 of the year after you retire to start taking your money.  And, you will no longer get the tax break for making contributions to those types of funds.

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