…In preparing for retirement, there are nine deadlines everyone should keep in mind. These affect your retirement, taxes, Social Security, Medicare and other aspects of your financial health.
(Please note: Lorimer Wilson, editor of munKNEE.com (Your KEY To Making Money!), has edited* ([ ]) and abridged (…) Jim Puplava’s original article here for clarity and brevity to ensure a fast & easy read. Also note that this complete paragraph must be included in any re-posting to avoid copyright infringement.)
- …You can now begin to contribute an additional tax-deferred amount of $6,000 to your 401k…
- You can now withdraw funds from your 401k without incurring the usual 10% penalty…
- You can contribute an additional $1,000 into your health savings account, if you qualify and have a high deductible health insurance plan.
- The cap is $4,350 for an individual health savings account and $7,650 for a family HSA.
- …You may start withdrawing money from your IRA pension program without paying an additional 10% penalty.
- …You can begin collecting survivor benefits on a deceased spouse’s Social Security.
- It’s important to remember, however, that if you begin collecting at this point in your life, you are likely going to only take home [only] 71% of the full benefit you would be entitled to at full retirement age (which is likely to be 66 or 67, depending on your current age).
- You also need to be careful about taking this benefit at 60 if you are still working. Generally, you do not want to take the benefit at this point because if you exceed a certain amount of income you will be subject to the earnings test, reducing your benefits.
- Instead, plan to hold off taking a survivor benefit, especially if you are working, and allow it to accumulate, providing more return in the long run.
- …You can access Social Security.
- It may be better to wait to take benefits, however, because at 62 you’re only going to get 75 percent of your full retirement benefits that you would at age 66 or 67.
- …You become eligible to qualify for a reverse mortgage.
- These sponsored programs allow you to live in your home while tapping your equity, which you can use as income to pay expenses.
- You are now eligible for Medicare.
- It isn’t necessary to enroll in Medicare if you’re still working and are covered by an employer plan.
- If you are no longer working, however, you need to enroll during the enrollment period, which begins three months before you turn 65, and extends to three months after.
- If you don’t enroll during this window you may be subject to a penalty.
- Be aware, however, that once you turn 65 and enroll in Medicare, you can no longer contribute to a health savings account.
- If you were born between 1943 and 1954, turning 66 means you now qualify for full retirement under Social Security rules. At this age, you will now receive 100% of your benefit, provided you fall within the cutoff dates.
- Those born between Jan. 2*, 1955 and Jan 1, 1960 have a somewhat convoluted setup.
- If you were born in 1955, you hit full retirement at 66 years of age plus two months.
- Each year thereafter adds two months to full retirement age so, from 1956, full retirement age is 66 plus four months; from 1957, full retirement is 66 plus six months; from 1958, full retirement is 66 plus eight months; and from 1959—actually, this extends to those born on Jan. 1, 1960—full retirement is 66 plus 10 months.
- (*Social Security benefits are calculated such that, if you were born on the first of any given month, your benefit is figured as though you were born in the month prior so, if you were lucky enough to be born on Jan. 1, 1955, you came in just under the wire to qualify for full retirement at 66.)
- If you were born after Jan. 2, 1960, your full retirement age is 67.
- The moment you turn 70, your Social Security benefits will no longer grow by the usual 8% on an annual basis if you defer taking benefits.
- After this age, deferred benefits will only grow by cost-of-living adjustments. This means you should most likely take your benefit at 70, unless there are unusual extenuating circumstances.
- …You are now required to take a mandatory distribution annually from every IRA plan you own.
- If you don’t take a distribution, you will pay a 50% tax penalty on the amount that you should have taken out. For this reason, it’s wise to consolidate all IRAs into one account to avoid the mistake.
Every one of these dates are important…They should become a part of your planning process prior to considering retirement and even when you are retired.