Planning for Retirement? These Numbers Really Matter


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Age may be "nothing but a number," but when it comes to retirement planning, some of those numbers are very important. Here are a few age milestones that it pays to be aware of, whether you are already retired or charting your retirement course.

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When you turn 50:You can sock more money away toward retirement in a 401(k), a 403(b), an IRA, and some other tax-advantaged retirement savings plans. These "catch-up" contributions can help you make up for lost time if you find yourself behind in your retirement savings, or if you want to power up your savings down the home stretch. For traditional and Roth IRAs, IRS contribution limits for 2016 allow you to put away an additional $1,000. If you have a 401(k), 403(b) or 457 plan, then the catch-up amount jumps to an additional $6,000 on top of what younger workers can contribute.

When you turn 55:If you leave or lose your job in the year you turn 55, then you might be able to withdraw money from a tax-deferred savings plan without paying a 10% tax penalty. That can happen as long as you qualify for one of the exceptions listed in the federal tax code. At 55 you also may be eligible to receive pension benefits from some employer plans if you've accumulated enough years of service at your company.

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When you turn 59-1/2:You can usually withdraw money, without owing a 10% tax penalty, from tax-deferred plans such as IRAs, annuities, and, provided you've retired or left your job, employer-sponsored savings plans like a 401(k).

When you turn 60:You can receive reduced Social Security benefits if you are a widow or widower, though it is often in your best financial interest to wait if you can.

When you turn 62:You may be eligible for full pension benefits from your employer, depending on the plan. And if you choose, you can begin to receive reduced Social Security benefits. "Reduced" means you'll receive 20% to 30% less than you would receive if you waited until your full retirement age -- and your spouse's benefit may be reduced even more. The Social Security Administration (SSA) offers helpful information on when to start receiving retirement benefits.

When you turn 65:You can receive full pension benefits from most employers. And you normally qualify for Medicare benefits. For Social Security, 65 used to be the age at which people were eligible to receive full Social Security benefits. However, if you were born after 1937, your eligibility depends on the year of your birth. The age at which widows or widowers become eligible to claim full survivor benefits used to be 65 as well. Now, if you were born after Jan. 2, 1940, your eligibility depends on the year of your birth.

When you turn 67:If you were born in 1960 or later, then 67 is the earliest age at which you can claim full Social Security benefits.

When you turn 70:You should begin to collect your full Social Security benefits if you haven't already. There is no additional benefit increase after you reach age 70, even if you continue to delay taking benefits.

When you turn 70-1/2:If you have a traditional IRA or an employer-sponsored retirement plan like a 401(k), then IRS rules mandate that you take your first required minimum distribution, or RMD, by April 1 of the year following the calendar year in which you reach 70-1/2 years of age. For each subsequent year after you begin taking RMDs, you must withdraw your distributions by Dec. 31. The amounts you withdraw typically count as taxable income unless you already paid taxes on your contributions. You do not have to take RMDs from Roth IRAs, and if you're still working, you do not have have to make withdrawals from your employer-sponsored retirement plan.

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