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.