In your 50s you may be entering the last decade of being able to accumulate assets for retirement. It is also an important time to consider your retirement income strategy, especially if you are looking to retire early. Here are some milestones for you to keep in mind:
- Age 50 - You may now be able to make catch-up contributions to qualified retirement plans and IRAs.
- Age 55 - After age 55, if you are considering retiring early, you may be able to use Separation from Service to withdraw assets from your 401(k) plan and pay only ordinary income on the amount withdrawn with no penalty and transfer remaining assets to an IRA.
- 591/2 - You can now withdraw assets from retirement plans without a 10% penalty from the IRS.
- 62 - 62 is the age most individuals start taking Social Security benefits. However, doing so means a 25% permanent benefit reduction.
- 65 - Time to sign up for Medicare before your 65th birthday.
- 66 - Those born from 1943 - 1955 are now eligible for full Social Security benefits.
- 70 - At age 70, Social Security maxes out at 132% of the initial full benefit. This is your last chance to position assets before required minimum distributions (RMDs) begin.
- 70 1/2 - RMDs from traditional IRAs and some other retirement plans begin. Failure to take them can lead to an IRS penalty of 50% tax on the amount that should have been taken.
We can help and advise you on all of these milestones.