Later Life Milestone Ages
Going COVID-19 stir crazy? Got 3 to 5 minutes to do some simple math? I created a worksheetthis week for my forthcoming book, Flipping a Switch, to help readers think about their financial future in later life. All you need to do is write down your birthday year and identify the year that you will reach six milestone ages. Having that information can help you firm up your future financial plans.
Below is a brief description of each milestone event age and why it is so important:
Age 50- Workers become eligible to make catch-up contributions for individual retirement accounts (IRAs) and tax-deferred employer retirement savings plans (e.g., 401(k), 403(b), and 457 plans and the thrift savings plan or TSP).
Age 59½- No penalty for early withdrawals from IRAs and tax-deferred employer retirement savings plans. Of course, income taxes on the withdrawn amount are taxed as ordinary income in the year that a plan withdrawal is made.
Age 62- The earliest age to receive a Social Security benefit that will be permanently reduced if received between age 62 and full retirement age (FRA). If your FRA is 66, the benefit reduction is 25% and if FRA is 67, the benefit is reduced by 30%.
Age 65– Medicare eligibility begins. Medicare Part B premiums can be delayed if someone is still employed and receiving employer health insurance benefits. People already receiving Social Security at age 65 are automatically enrolled.
Age 66 to 67– Workers reach FRA and eligibility for full Social Security benefits according to year of birth. For example, age 66 if you were born between 1943 and 1954, age 67 if you were born in 1960 or later, and a pro-rated time in between.
Age 72– Age at which required minimum distributions (RMDs) from tax-deferred retirement savings plans must begin (although they were suspended for 2020 as part of the CARES Act). The required beginning date to take your first RMD is April 1 of the year following the year that you reach age 72 (note: doing this will result in two RMD withdrawals that year).