According to the Center for Disease Control August and September win the title as the months during which the most babies are born. This means many of you have birthdays coming up. Certain milestone birthdays present special tax and investment questions to be considered.
Of course, we first suggest that you begin saving for your retirement when you get your first job. The longer you save, the better off you should be, because time is your strongest asset when it comes to retirement savings.
Age 50: Catch-up contributions may be made to IRAs and qualified retirement plans. Even if you have been saving your entire life, we still believe it is a smart move to save the extra money with a catch-up contribution.
Age 55: Penalty-free distributions may be taken from 401(k) plans, if retired. Catch-up contributions may be made to HSAs.
Age 59½: Penalty-free distributions may be taken from IRAs and qualified plans and from Roth IRAs, if the account has been open at least five years.
Age 60: Application may be made for early Social Security benefits by widows or widowers, who are claiming benefits under spouse’s earning record.
Age 62: Application may be made for early Social Security benefits under own earnings record; amount will be reduced. However, we strongly recommend that you do not do so, unless you are in poor health, or need the money. While the Social Security system was designed to provide neither a penalty nor reward for those who wait, with our general longevity, it may be better to delay benefits until your full retirement age.
Age 65: Application should be made for Medicare benefits, unless you’re covered by a group plan.
Age 66: Full retirement age for unreduced Social Security benefits. You can also continue to work at this age, and earn as much as you can, without reducing your Social Security benefits.
Age 70: Apply for Social Security to get maximum benefit.
Age 70½: Must start required minimum distributions from IRA. The first required minimum distribution must be made from your retirement accounts by April 1, following the year you reach age 70½, regardless whether you are retired. Distributions must then be taken each subsequent year. The required minimum withdrawal is used to calculate the 50% excise penalty on Excess Accumulation, an insufficient distribution. If you do not withdraw your required minimum distribution after age 70½, you will be penalized 50% of the shortfall.
Disclosures
This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
