Retirement: Age Markers
June 15, 2016
Calendaring Retirement: Key Age Markers
Retirement requires planning, and for this planning process, you need to keep abreast of and respond to your life calendar. Whether you are planning to retire to one of our active 55+ Delaware communities or somewhere else, your age entitles you to different retirement-related benefits, which are critical for making the most of this exciting life-change.
Turning 50: If you are working, you are eligible to make additional (catch-up) contributions to your 401(k) and/or IRA accounts. Taxes may be deferred for up to $24,000 in 401(k) accounts and $6,500 in IRA accounts in 2016.
Turning 55: As soon as you turn 55, if you leave (or lose) your job, you do not have to pay an early withdrawal penalty on 401(k) distributions from that most recent job.
Turning 59 1/2: After hitting this milestone, the early withdrawal penalty of 10% on 401(k) and IRA distributions disappears.
Turning 62+: You can begin claiming Social Security benefits, but it is better to wait as long you can before doing so. The sooner you claim this benefit, the lower your payments will be. It is possible to collect Social Security benefits while working, but be aware that part or all of your payments may be temporarily withheld.
Turning 65: Three months before turning 65, your seven-month initial Medicare enrollment period begins. Failing to sign up on time means that:
1) Your Medicare Part B and D premiums could permanently increase.
2) You may be denied the chance to purchase supplemental coverage.
Many people are still working when they hit this milestone. In this case, be aware that you need to sign up within eight months of leaving your job and/or group health insurance plan to avoid higher premiums.
Turning 66: At this age, if you are a baby boomer (born between 1943-1954), you may begin to collect your full Social Security benefits. If you were born from 1955-1966, that age is 66 1/6 (or 2 months). If you were born in 1959, that age is 66 5/6 (10 months). At this age and older, Social Security benefits will not be withheld should you work and collect them at the same time.
Turning 67: If you were born in 1960 or later, this is your retirement age for collecting your full Social Security benefits.
Turning 70: If you can delay Social Security benefit claims until this age, your payments will increase by approximately 8 percent annually. After 70, you do not benefit by waiting any longer to claim Social Security.
Turning 70 1/2: You are required to start taking distributions from your IRA, 401(k), and Roth 401(k) accounts. Income taxes are due on withdrawals from these traditional retirement accounts—but not on Roth IRAs. If you are still employed (and do not own 5 percent or more of your employer), you can delay distributions from current 401(k) accounts until April 1 of the year after you retire. For investors at 70 1/2 and beyond, you are no longer eligible for tax deductions on traditional IRA contributions.