This is the simplest list of retirement date summaries I have ever run across - and includes some deadlines I've never heard of. Generation America is the conservative alternative to AARP...
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Social Security, Medicare and More -- What Are the Dates to Remember?
Jun 18, 2012
Dear Readers: As more and more of the boomer generation heads toward retirement, I get a lot of age-related questions. Can I tap into my 401(k) early? When should I take Social Security? Should I apply for Medicare if I'm still working? The answers all have to do with certain dates and deadlines that you'll want to keep in the top of your mind.
While you may think by the time you reach your 50s you've passed most of life's major milestones, think again. From 55 on, there are a number of age-related financial milestones that you can't afford to ignore, no matter how young you feel. Miss them and you'll not only miss some of the perks that come with getting older, you may also be penalized for your lack of attention.
So before you declare that you'll never acknowledge another birthday, at least put these ages on your mental calendar — and keep this checklist handy.
Age 55: Possible penalty-free early 401(k) distribution.
If you're 55 or older and lose or leave your job, you can take a lump-sum distribution from your 401(k) under what's called separation of service, without paying a 10 percent early withdrawal penalty. And just for the record, if you leave your company before age 55, you can still set up a schedule of "substantially equal payments" and avoid the penalty. You will, however, pay income taxes on either type of distribution.
Age 59 1/2: Penalty-free withdrawals from any of your retirement accounts.
Whatever type of retirement account you have — IRA, 401(k), 403(b), SEP, SIMPLE, you name it — at 59 1/2 you can begin making withdrawals penalty free. Once again, you'll pay income taxes on the earnings and any contributions that were tax deductible. However, in the case of a Roth IRA, if you've held it for five years, contributions and earnings are tax free, as well as penalty free.
Age 62: Early Social Security benefits.
This is the soonest you can file for Social Security, unless you're disabled. But if you do, your benefits will be permanently reduced by approximately 25 percent. Plus, benefits will be further reduced if you're still working and earn beyond a certain limit. You can apply for Social Security when you're within four months of the first full month you turn 62. However, this may not be the wisest choice. SSA.gov has a convenient online calculator to help you determine the best time for you to start benefits.
Age 65: Eligible for Medicare.
If you're already receiving Social Security, you'll be automatically enrolled in Medicare Parts A and B at 65. But if not, you need to apply. Ideally, you should apply three months before the month you turn 65. Just call or visit your local Social Security office, or call the SSA at 800-772-1213. You can also apply online. Note: You can choose to decline Part B coverage, but you may pay a penalty for late enrollment.
AGES 66-67: Full retirement age.
You can begin collecting full retirement benefits when you reach what the IRS designates as full retirement age, FRA. For boomers and younger, FRA ranges between 66 and 67, depending on when you were born. (Check with the SSA.) At your FRA, you get full benefits, even if you continue to work. However, if you delay, your benefits will increase by 8 percent a year until age 70. When you decide to apply, you can easily do it online at SSA.gov.
Age 70: No further increase in Social Security benefits.
Social Security benefits increase up to age 70, but not beyond. There's no reason to further delay taking benefits — you earned them!
Age 70 1/2: Required minimum distribution, RMD.
At this age, you're required to begin taking money from your tax-advantaged retirement accounts with the exception of a Roth IRA or your 401(k), if you're still working. Your minimum withdrawal — your RMD — is determined by a formula based on life expectancy and the amount you have in tax-advantaged accounts. Your tax professional can help you determine your RMD. Some financial companies do it automatically for clients. And there are a number of online calculators to help you do it yourself.
Important Note: You absolutely must take your first RMD by April 1st of the year after you turn 70 1/2 or face a hefty 50 percent penalty! And if you wait until that date, you must take your second RMD by Dec. 31st of that same year. You don't want to miss these deadlines .
At any age: Planning for retirement isn't just about dates and deadlines, it's about planning ahead. So be sure to review your retirement strategy well in advance — and save as much as you can for as long as you can. If you take the time now to secure your financial future, you can enjoy every age to the fullest.
Carrie Schwab-Pomerantz, CERTIFIED FINANCIAL PLANNER(tm), is president of Charles Schwab Foundation and author of "It Pays to Talk." You can e-mail Carrie at askcarrie@schwab.com. This column is no substitute for an individualized recommendation, tax, legal or personalized investment advice. To find out more about Carrie Schwab-Pomerantz and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.
COPYRIGHT 2012 CHARLES SCHWAB & CO., INC. MEMBER SIPC
DIST BY CREATORS SYNDICATE, INC.
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