Retirement can be something that sneaks up on you and catches you off guard. It can creep up and then cause you to feel rushed and unprepared when making these important decisions. You will need to plan ahead of time and know the important ages and dates since there are strict deadlines when claiming certain kinds of retirement benefits.
Below is a list of ages to be aware of when it comes to benefits:
Age 50: At age 50 and up, you become eligible to make catch-up contributions to a 401k or IRA accounts. An older worker can put off up to $24,000 of their taxes in the 401k and up to $6,500 in the IRAs in the year 2016. This is about $6,000 and $1,000 more than younger employees.
Age 55: If you’ve left or lost your job in the same calendar year as your 55th birthday or later, you won’t have to pay an early withdrawal penalty on distributions from your 401k plan from that job.
Age 59 ½: At this age there will no longer be a 10% early withdrawal penalty on 401k or IRA distributions at all.
Age 62: If you sign up for Social Security at this age your payments will be permanently reduced, this is the age you can begin to claim Social Security. If you decide to keep working while collecting Social Security, some or all of the benefit payments can be temporarily withheld.
Age 65: There is a 7 month enrollment period for Medicare, it will begin 3 months before your 65th birthday, the month you are born and continue 3 months after. If you don’t sign up on time then your Medicare Part B and D premium prices could increase, you could also be denied the chance to buy supplemental coverage. If you are still working at 65, to avoid a higher premium you will need to sign up within 8 months after leaving your job or health insurance plan.
Age 66: You can start collecting the entire Social Security benefit you have earned at your Full Retirement Age, for people born between 1943-1954 that is age 66. For people born in 1955 the Full Retirement Age increases to 66 and 2 months. If still working and collecting Social Security at Full Retirement Age and older, your Social Security benefits will no longer be reduced.
Age 67: For people born in 1960 or later, this is the Full Retirement Age.
Age 70: For workers who delay claiming Social Security payments, they will increase by around 8% each year. After 70, there will be no additional benefit for waiting to claim your Social Security.
Age 70 ½: Distributions from traditional IRAs, 401ks and Roth 401ks are required. Your income tax will be due on withdrawals from retirement accounts, except for Roth IRAs. Workers who don’t own 5% or more of the company they are currently working for can put off distributions from their 401k until the first of April of the year after they’ve retired. At this age, investors are no longer eligible for tax deduction on their traditional IRA contributions.
There are certain dates to also be aware of when it comes to planning your retirement properly. Knowing the particular dates will help you so you don’t miss a deadline and can plan ahead of time for which plan fits you best.
Below is a list of important dates:
December 31st: Your 401k contributions are usually due by the end of the year. There is also a required minimum distribution from a retirement account that will be taken by December 31st each year to avoid a 50% tax penalty on the amount that should have been withdrawn.
April 1st: You will have the ability to delay your first required minimum distribution from a 401k of IRA, until April 1st of that year after you’ve turn 70 ½. Which means your second and all distributions will be due on December 31st annually. Be aware that by delaying your first distribution this will require you to take out two distributions in that same year, which could lead to you having a very high bill that year.
April 15th: By this time you can make IRA contributions up until the tax filing deadline, which will usually be around April 15th every year. Contributing to an IRA in April could lead you to immediate tax savings on your current bill.
October 15th to December 7th: If you have Medicare Part D then you have the option to switch plans (at the Medicare site) each year between Oct 15th and Dec 7th during the annual enrollment period. This is the time to make sure that the medications you need will continue to be covered at a reasonable price for you. If their prices have gone up and are no longer affordable to you, switching plans may be something to look into.
Also, you can join a Medicare Advantage plan or switch back to original Medicare if you need to. If you do decide to swap plans, your new plan will begin on January 1st. Meeting the deadlines listed above is a very important part of planning your retirement successfully. Missing a specific date or age can create large penalties and hefty fees for you; it will also make you miss out on the best possible retirement plan for you.