Planning matters

Happy Birthday? Retirement Decisions at Age 55+

You may think that only those birthdays ending with a zero are a big deal, but in the world of retirement planning, the ages between 55 and 72 are a busy time. If you will be hitting a “milestone” birthday soon, you’ll have some decisions to make (in addition to what you should plan to wish for when you blow out the candles).

Here’s a handy list of the birthdays that involve some kind of financial decision:

AT AGE 55

If you separate from your employer at this age (retire, quit or termination), you can usually begin withdrawing from 401(k) and 403(b) plans without a 10% penalty. You’ll still owe taxes on the amount taken out, though.

You may be eligible for full pension benefits from certain employer plans if you have enough years of service. If you have a company pension, know & understand the rules before making the decision to start your payout, as it’s irrevocable.

 

AT AGE 59 ½

You can withdraw money from tax-deferred savings plans (IRA accounts, deferred annuities) without paying a 10% early withdrawal penalty. Taxes are still owed on any amount withdrawn, however.

 

AT AGE 60

If you are a widow or widower, you may be eligible to start drawing Social Security benefits against your deceased spouse’s earnings record. Note that earned income limits apply, so if you are still working, you may receive a reduced (or zero) benefit.

 

AT AGE 62

This is another age at which full pension benefits are often payable. Check with your employer – every pension plan is different!

Age 62 is also the earliest age at which you can begin collecting a reduced amount of Social Security benefits. Note that if you start your benefits before reaching your full retirement age, they are permanently reduced and the decision is irrevocable.

 

AT AGE 65

You are eligible for full pension benefits from most employers.

You qualify for Medicare benefits. If you are still working, be sure to coordinate with your human resources department to determine whether Medicare will become your primary or secondary payer.

 

SOMETIME BETWEEN AGE 66 – 67

If you were born between 1955 and 1959, you’re eligible for full Social Security benefits on a phased-in schedule. You can also take a reduced benefit earlier.

 

AT AGE 67

If you were born in 1960 or later, you’re eligible for full Social Security benefits. You can also take the benefit earlier, but there will be a reduction.

 

AT AGE 70

You should begin to collect your Social Security benefits if you haven’t already. Your base benefit reaches the maximum at this age, and won’t increase any more by waiting.

 

AT AGE 72

You must begin withdrawals from your 401(k), 403(b), SEP IRA, SIMPLE IRA, 457 deferred compensation and traditional IRA accounts in the year you turn 72.

 

Perhaps one of these milestone birthdays is right around the corner, or way down the road. Either way, your planner is continuously looking ahead to assist you with weighing the pros and cons of the choices as they come along.