In the 21st Century, we no longer expect employers to reward us at 65 with a gold watch, guaranteed pension, and health insurance for life. With life spans into the eighties and nineties it is likely you will be active with opportunities to spend time with family and friends, start a new hobby or craft, take courses, start a new career, and volunteer. Therefore, when you are planning your retirement, keep these ages in mind.
At age 50, you may qualify to make catch-up contributions to your employer sponsored and individual retirement arrangements.
At age 59½, the IRS drops the 10% early withdrawal penalty from retirement plans, however, continuing to invest money within means deferring ordinary income tax while allowing time for assets to appreciate.
At age 62, you may qualify to receive reduced Social Security retirement income.
At age 65, you may be eligible for Medicare, the official U.S. Government medical insurance and a Medicare supplement policy through a commercial insurance company.
If you decide to delay Social Security retirement income until after age 65, make sure to apply for Medicare within three months of your 65th birthday. If you wait longer, your medical insurance (Part B) and prescription drug coverage (Part D) may cost more money.
At age 66, you may be eligible for full Social Security retirement income if you were born between 1943 and 1954.
At age 67, you may be eligible for full Social Security retirement income if you were born after 1960.
Social Security retirement income increases by a certain percentage (depending on your birth date) if you defer beyond full retirement age. However, the increase no longer applies when you reach age 70.
At Age 70½, the IRS requires minimum distributions from most retirement arrangements to avoid a 10% late withdrawal penalty.
The big question is “when do I begin withdrawing retirement income?” Generally, early or late retirement gives you about the same total Social Security retirement income over your lifetime. If you retire early, the monthly income will be smaller taking into account the longer time you receive payments. If you retire late, the monthly income will be larger to make up for the months you did not receive anything. The retirement income you start with sets the base for the amount you will receive for the rest of your life. Consider these questions before making your decision:
While unexpected changes in personal circumstances occur, the final question is... will you be financially independent and socially secure?
Chris Bryant is an American financial advisor.