59½
Oh, the magic age that will give you the green light to withdraw from investments that you’ve made into 401(k)’s, Simple IRA’s, SEP’s or regular IRA’s, without the penalty of 10% for early distribution. Though, don’t forget, you’ll have to pay income taxes on both the state and federal levels once the funds are withdrawn.
62
Now’s the time that you can start claiming your Social Security early, but the downside is that up to 30% of your benefits will be reduced for the rest of your life. If you can hold off until full retirement age when you reach between 65 and 67 years old – depending on the year you were born – you can collect the entire amount.
65
Even up to three months before you turn 65, you can sign up for Medicare Part A (inpatient care) & Part B (outpatient), to make sure that it kicks in on the day of your birthday. Part A is for those who are eligible for Social Security and Part B is a voluntary option for a monthly premium. Medicare Part C, a managed care plan, gives you a broader healthcare coverage than the regular Medicare Part A & B. And, as we know how prescription drugs can get expensive, Medicare Part D is a plan that helps reduce your costs on prescription medications.
70½
You’ve now reached the maximum age. Once you hit 70½, you are required by law to withdraw a minimum amount from your retirement IRA account every year by December 31st or you face penalties. This is a hefty penalty of 50% on the shortfall. The withdrawal is considered part of your adjusted gross income (AGI) on your taxes. Wondering what the minimum withdrawal amount is? It’s calculated as the balance of the IRA divided by the joint life expectancies of your account beneficiaries.
Happy Birthday!
