Life is full of iconic benchmark birthdays, some we gleefully anticipate, others we foolishly dread:
- Eighteen – Legal adulthood – sort of.
- Twenty-one – Let’s have a (legal) beer!
- Thirty – Where did my youth go?
- Forty – Lordy, lordy!
And, of course…
65 – Aren’t you retiring this year?
But these aren’t the only important birthdays. When it comes to planning and managing your retirement resources, you need to keep a near constant eye on the calendar as important programs and rules kick-in at various ages.
significant birthdays that may require your attention!
50 – Starting at the half-century mark, you can stash an additional $6,500 per year in your 401(k) and an extra $1,000 in your IRA. These higher limits are appropriately called “catch-up” provisions.
55 – If you leave your job in the calendar year you turn 55, you can start taking withdrawals from that company’s 401(k) without paying the 10% early withdrawal penalty. But don’t roll that dough into an IRA. That will make it subject to early withdrawal penalties until you are…
59 ½ — You are now free to take money out of your 401(k) or traditional IRA without penalty. However, this money is subject to income tax. (Roth IRA withdrawals are not taxed because you took that hit back when you put the money in that account.)
62 – You can start taking Social Security. But think carefully about doing so. Starting now will permanently reduce your benefits by 30%. If you take a part time job while getting Social Security at this age your benefits might be reduced or suspended, depending on how much you earn at work. Here’s a calculator that will help you understand how to maximize your Social Security benefits.