Happy Financial Birthdays
Back by popular demand and compliments of Nerdwallet, is an updated look at happy financial birthdays. Or not. All are subject to change.
And all of these treats are in addition to the nifty birthday cards you get from us!
We can help with any of these!
Age 50: Annual additional catch-up contributions of $1000 for traditional/Roth IRA’s are allowed (from $6000 to $7000). For employer-sponsored plans like 401K’s or 403B’s, the annual catch-up amount is $6500 (from $19,000 to $26,000)
Age 55: You can now (usually) withdraw dollars from your employer-sponsored retirement plan if you leave your employer for any reason, without the 10% early withdrawal penalty. Income taxes still have to be paid. Of course.
Age 59½: Withdrawals from any retirement plan without a 10% early withdrawal penalty are now allowed. Income taxes – uh yeah.
Age 60: For most widows/widowers, this is the earliest age to collect survivor social security benefits. There are situations where survivor benefits can begin earlier.
Age 62: This is the earliest age for social security benefits to begin (yours or spousal) but amounts are permanently lower than if you wait until full retirement age which is currently 66-67. There is also a reduction in benefits until you reach full retirement age, if you earn over $18,960 in 2021.
Age 65: You are now usually eligible for Medicare. Get signed up before you turn 65 if you can.
Age 66-67: This is considered full retirement age. This is age 66 if you were born between 1943 and 1954. It goes up by two months per year until you reach 67 if born after 1960. This will change of course. Starting to receive social security at this age means no reduction due to early start payments or income.
Age 70: Delaying social security beyond your full retirement age (see above) increases your (or your spouse’s) benefit by 8% per year until it maxes out at age 70.
Age 72: Required minimum distributions (RMDs) out of traditional, non-beneficiary IRA’s start at age 72. The government has been waiting for its (fair) share of income taxes for decades, so this is the time. There are other rules for employer sponsored plans if you are still working. Does not apply to Roth IRA’s. Qualified charitable contributions up to the amount of your RMD are not currently subject to income tax.