The road tones.
These milestones here.
That said, if you are a business owner, your primary investments are going tones will be much different than those shared here, and they should be considered in the context of our LIFT (legal, insurance, financial, and tax) Planning for your business. If you own a business, please contact us for support with LIFT planning.
However, if you work for someone else, or your income is otherwise dependent on being employed, here are several key milesto consider as your plan for retirement.
Age 21 to 49: Make savings a habit
The key to reach vital retirement goals as you get older.
With this in mind, one of the most important things you can do at this age is to get the full benefit of your employer’s matching contribution if one is offered.
For 2022, you can contribute up to consider investing with a focus on maximizing growth, rather than taking a more conservative approach.
Age 50: Catch-up contributions begin
Once you reach 50, you are likely in your peak earning years, so you should be maxing out your contributions to make an extra annual “catch-up” contribution.
In 2022, the catch-up contribution limit for a 401(k) or 403(b) is $6,500, which gives you a total limit of $7,000 annually.
Since you are likely nearing retirement age, you will have less to find a financial advisor, who in conjunction with us, can support you in planning for and reaching your retirement savings goals.
Age 55: 401(k) withdrawals possible under the Rule of 55
Although you generally must wait until age 59½ to make withdrawals from your 401(k) without incurring a 10% penalty, the IRS allows for a “separation of service” exception for certain workers. Also known as the Rule of 55, if you quit, were laid off, or otherwise terminated from your job during or after the year you turn 55, you can take withdrawals from your 401(k) or 403(b) penalty-free from the account associated with that job.
That said, you are still required to take withdrawals without any penalty.
Age 59 1/2: Penalty-free retirement account withdrawals begin
Outside of the “separation of service” exception, this is the age when you can begin taking withdrawals from your retirement account, such as a 401(k), 403(b), and IRAs, without the 10% early withdrawal penalty. While you are free to make any withdrawals until age 72.
Though not subject to pay taxes.
Age 62: Social Security eligibility begins
This is the earliest age you can begin claiming Social Security retirement benefits. However, if you take Social Security early, your monthly benefit will be reduced by as much as 30%, depending on your date of birth. Conversely, your benefit amount increases each year until you start claiming benefits, or when you reach age 70, whichever comes first.
The age at which you are eligible for 100% of your Social Security benefit is known as your full retirement age. The full retirement age used to 67, depending on the year you were born. As such, the dates below show your full retirement based on your birth date.
These milestones here.
That said, if you are a business owner, your primary investments are going tones will be much different than those shared here, and they should be considered in the context of our LIFT (legal, insurance, financial, and tax) Planning for your business. If you own a business, please contact us for support with LIFT planning.
However, if you work for someone else, or your income is otherwise dependent on being employed, here are several key milesto consider as your plan for retirement.
Age 21 to 49: Make savings a habit
The key to reach vital retirement goals as you get older.
With this in mind, one of the most important things you can do at this age is to get the full benefit of your employer’s matching contribution if one is offered.
For 2022, you can contribute up to consider investing with a focus on maximizing growth, rather than taking a more conservative approach.
Age 50: Catch-up contributions begin
Once you reach 50, you are likely in your peak earning years, so you should be maxing out your contributions to make an extra annual “catch-up” contribution.
In 2022, the catch-up contribution limit for a 401(k) or 403(b) is $6,500, which gives you a total limit of $7,000 annually.
Since you are likely nearing retirement age, you will have less to find a financial advisor, who in conjunction with us, can support you in planning for and reaching your retirement savings goals.
Age 55: 401(k) withdrawals possible under the Rule of 55
Although you generally must wait until age 59½ to make withdrawals from your 401(k) without incurring a 10% penalty, the IRS allows for a “separation of service” exception for certain workers. Also known as the Rule of 55, if you quit, were laid off, or otherwise terminated from your job during or after the year you turn 55, you can take withdrawals from your 401(k) or 403(b) penalty-free from the account associated with that job.
That said, you are still required to take withdrawals without any penalty.
Age 59 1/2: Penalty-free retirement account withdrawals begin
Outside of the “separation of service” exception, this is the age when you can begin taking withdrawals from your retirement account, such as a 401(k), 403(b), and IRAs, without the 10% early withdrawal penalty. While you are free to make any withdrawals until age 72.
Though not subject to pay taxes.
Age 62: Social Security eligibility begins
This is the earliest age you can begin claiming Social Security retirement benefits. However, if you take Social Security early, your monthly benefit will be reduced by as much as 30%, depending on your date of birth. Conversely, your benefit amount increases each year until you start claiming benefits, or when you reach age 70, whichever comes first.
The age at which you are eligible for 100% of your Social Security benefit is known as your full retirement age. The full retirement age used to 67, depending on the year you were born. As such, the dates below show your full retirement based on your birth date.
Year of birth: Age to receive full Social Security benefits
1943-1954: 66
1955: 66 and 2 months
1956: 66 and 4 months
1957: 66 and 6 months
1958: 66 and 8 months
1959: 66 and 10 months
1960 or later: 67
Age 64 3/4: You can enroll in Medicare
You can enroll in Medicare at any point during the seven-month period that begins three months before the month you turn 65. Medicare is our government’s basic health insurance program for those age 65 or older.
Unless you are still covered by the health insurance of your employer or your spouse’s employer, you should consider enrolling in Medicare during this seven-month window to enroll later on.
That said, if you still have health insurance from your employer or your spouse’s employer, you can postpone enrolling in Medicare until that coverage ends, without having to pay higher premiums.
Age 65: Medicare begins and you can enroll in Medigap
If you enrolled in or are receiving Social Security, you qualify for Medicare coverage on the first day of the month in which you turn 65, regardless of whether or not you are retired. On that same day, the six-month enrollment window for the Medicare supplemental insurance known as Medigap also begins. Medigap is private insurance that helps you cover a portion of the out-of-pocket copays and deductibles of traditional Medicare.
If you plan to sign up for Medicare with incurring a penalty.
Age 70: File for Social Security, if you haven’t already
As mentioned earlier, the longer you wait to claim Social Security between your full retirement age and age 70, the higher your benefits will be. In fact, your benefits increase by 8% for each year you wait between your full retirement age and 70. But once you reach 70, your benefits no longer increase, so don’t put off filing for Social Security past this age.
Age 72: Required minimum distributions (RMDs) begin
Once you reach 72, you are required by law to begin taking distributions from tax-deferred retirement accounts, such as a 401(k), 403(b), and traditional IRA. These are known as required minimum distributions (RMDs), and your first distribution must be taken by April 1 of the year you turn 72. Thereafter, annual withdrawals must be taken by December 31 of each year.
Note: RMDs don’t apply to these accounts are made with after-tax dollars.
It’s extremely important to 50% of the amount you should have withdrawn. The amount you must withdraw for your RMD depends on the balance in your account and your life expectancy as defined by the IRS.
To calculate your RMD, from there, locate your age in the table, and find the “life expectancy factor. This should give you the amount of your RMD.
Start Planning For Retirement Now & Consider Creating a Work-Until-You-Die-Happy Plan
While all of these recommendations relate to get paid through the rest of your life.
Work-until-you-die might sound like a terrible plan, but only if you don’t love your work. If you do love your work, contributing your talents until you die (and getting paid for it) is a great plan for a life worth living and a legacy worth leaving. And it will keep you younger and healthier far longer than working at a job you dread, but have to earn a living.
If you are relying on a work-until-you-die plan (rather than saving enough to all of our clients.
Consider What’s At Stake
When preparing for your senior years, it’s not enough to unhappiness. The stakes could hardly be higher.
While the best way to retirement is as smooth as possible.
And if you need help finding a financial advisor, we will introduce you to get started.
You can enroll in Medicare at any point during the seven-month period that begins three months before the month you turn 65. Medicare is our government’s basic health insurance program for those age 65 or older.
Unless you are still covered by the health insurance of your employer or your spouse’s employer, you should consider enrolling in Medicare during this seven-month window to enroll later on.
That said, if you still have health insurance from your employer or your spouse’s employer, you can postpone enrolling in Medicare until that coverage ends, without having to pay higher premiums.
Age 65: Medicare begins and you can enroll in Medigap
If you enrolled in or are receiving Social Security, you qualify for Medicare coverage on the first day of the month in which you turn 65, regardless of whether or not you are retired. On that same day, the six-month enrollment window for the Medicare supplemental insurance known as Medigap also begins. Medigap is private insurance that helps you cover a portion of the out-of-pocket copays and deductibles of traditional Medicare.
If you plan to sign up for Medicare with incurring a penalty.
Age 70: File for Social Security, if you haven’t already
As mentioned earlier, the longer you wait to claim Social Security between your full retirement age and age 70, the higher your benefits will be. In fact, your benefits increase by 8% for each year you wait between your full retirement age and 70. But once you reach 70, your benefits no longer increase, so don’t put off filing for Social Security past this age.
Age 72: Required minimum distributions (RMDs) begin
Once you reach 72, you are required by law to begin taking distributions from tax-deferred retirement accounts, such as a 401(k), 403(b), and traditional IRA. These are known as required minimum distributions (RMDs), and your first distribution must be taken by April 1 of the year you turn 72. Thereafter, annual withdrawals must be taken by December 31 of each year.
Note: RMDs don’t apply to these accounts are made with after-tax dollars.
It’s extremely important to 50% of the amount you should have withdrawn. The amount you must withdraw for your RMD depends on the balance in your account and your life expectancy as defined by the IRS.
To calculate your RMD, from there, locate your age in the table, and find the “life expectancy factor. This should give you the amount of your RMD.
Start Planning For Retirement Now & Consider Creating a Work-Until-You-Die-Happy Plan
While all of these recommendations relate to get paid through the rest of your life.
Work-until-you-die might sound like a terrible plan, but only if you don’t love your work. If you do love your work, contributing your talents until you die (and getting paid for it) is a great plan for a life worth living and a legacy worth leaving. And it will keep you younger and healthier far longer than working at a job you dread, but have to earn a living.
If you are relying on a work-until-you-die plan (rather than saving enough to all of our clients.
Consider What’s At Stake
When preparing for your senior years, it’s not enough to unhappiness. The stakes could hardly be higher.
While the best way to retirement is as smooth as possible.
And if you need help finding a financial advisor, we will introduce you to get started.
This article is a service of Baron Family Law, Personal Family Lawyer®. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life and Legacy Planning Session™, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office to get this $750 session at no charge.
All of our Life and Legacy Planning Sessions are happening virtually these days, and we can make the whole process quite easy and affordable for you and the people you love. You can begin by calling our office at (916) 905-0024 or scheduling online to get this $750 session at no charge.