Understanding the key ages in retirement planning can save you a lot of money and stress. On today’s episode, we will be going over some of those important birthdays and what you should know about those ages.
50, the big 5-0! You really need to get serious about retirement planning and buckle down if you haven’t already. This decade is about catching up (if needed) and developing a strategic long-term plan. A lot of people worry they are behind at this age. Did you know 401(k)s and IRAs have catch-up provisions that can help you save more? Depending on the account you may be able to put more in annually than is usual.
55 can be an overlooked age. At 55, you can take money out of a 401(k) without that 10% penalty if you’ve been laid off or fired. That means within the 4-year period between 55 and 59 ½ you have this option if it comes to it. For certain public safety professionals like firefighters or police officers, this safety net can start at 50 if needed. Of course, age 59 ½ is the normal age when someone can access their 401(k).
As we roll into our 60s, we really want to make sure our plan is laid out comprehensively. At this age, it’s important to cross your Ts and dot your Is. The biggest decisions you have coming up will be in relation to your Social Security and Medicare. The early collection age is 62 but the full retirement age is 66-67, depending on the year you were born. Waiting until this age may save you 25 – 30%. If you are a widow or widower though, you can collect Social Security at 60 with a hefty reduction of 28%. 65 is going to be the year you are eligible for Medicare.
70 is the longest you can wait to collect Social Security. If you wait until you turn 70 there is an 8% bonus each year. Accounting for that bonus and inflation you could be making a lot more income if you wait. The Required Minimum Distribution age used to be 70 ½ but is now 72. This is the age we’ll have to start paying the taxes we’ve deferred. The IRS has a painful penalty of 50% if you do not take an RMD. Whatever your age is now, it’s important to keep these things in mind. Keeping track of all these ages and what comes with each new year is best done with an experienced advisor that can help you navigate retirement.
Listen to the full episode to learn more or skip around to certain topics.
[0:30] – What’s new?
[3:15] – Important ages
[4:50] – Turning 50
[6:50] – Contributing a total of $7,000
[7:44] – Exceeding 26,000 in 401k
[10:01] – Turning 55 & 59 ½
[12:05] – Going into our 60s
[18:03] – Waiting till 70 for Social Security
[23:11] – Going into our 70s
Contact:
Phone: (732) 784-2867
Email: don@donaldcash.com
Website: http://www.donaldcash.com/
About Don:
Donald W. Cash – CPA, CFP® is an independent advisor. Don began his career in 1985 as an accountant after graduating Rutgers University. In 1990 he entered the field of Estate Planning with a concentration in long term care planning. Don has been advising clients in the baby boomer and retirement market for 20 years. He has helped over 1,000 families with their planning needs. He advocates a holistic approach to Estate and Financial Planning as has relationships with other professionals including Attorneys, CPA’s, Mortgage Specialists, Insurance Specialists and Asset Managers. Don is married to Cathy and have 4 children, Carly, DJ, Nick and Tori. They live in Freehold, NJ.