(The following is excerpted from Pensionless: The 10-Step Solution for a Stress-Free Retirement Copyright © 2016 by Emily Brandon and published by F+W Media, Inc. Used by permission of the publisher. All rights reserved.)
You need to pay attention to your age when making retirement decisions. There are deadlines for claiming various types of retirement benefits and avoiding penalties associated with them.
Key Ages for Retirement Planning
Here are some important age-related benefits to pay attention to:
Age 50 Workers age 50 and older are eligible to make catch-up contributions to their 401(k) and IRA accounts. Older workers can defer taxes on as much as $24,000 in 401(k) plans and $6,500 in IRAs in 2016, which is $6,000 and $1,000 more, respectively, than the amounts for younger employees.
The seven-month initial enrollment period for Medicare begins three months before your 65th birthday.
Age 55 People who lose or leave their jobs in the calendar year they turn 55 or later won’t have to pay the early withdrawal penalty on distributions from the 401(k) plan from their most recent job.
Age 59 ½ There’s no longer a 10 percent early withdrawal penalty on 401(k) and IRA distributions for you.
Age 62 You can claim Social Security benefits beginning at 62, but payments are permanently reduced if you sign up at this age. If you work and collect Social Security benefits at the same time, part or all of your benefit payments could be temporarily withheld.
Age 65 The seven-month initial enrollment period for Medicare begins three months before your 65th birthday. If you don’t sign up on time, your Medicare Part B and D premiums could permanently increase, and you could be denied the opportunity to purchase supplemental coverage. If you are still working at 65, you need to sign up within eight months of leaving the job or group health insurance plan to avoid the higher premiums.
Age 66 You can begin to collect the entire Social Security benefit you have earned at your Full Retirement Age, which is 66 for boomers born between 1943 and 1954. The Full Retirement Ageincreases from 66 and two months for people born in 1955 to 66 and 10 months for workers born in 1959. At Full retirement Age and older, Social Security benefits are no longer withheld if you work and collect Social Security benefits simultaneously.
Age 67 That’s the Social Security Full Retirement Age for people born in 1960 or later.