The Road to and through Retirement is Dotted with Time-sensitive Financial Planning Milestones
Not all birthdays are about a driver’s license, getting to vote or toasting with a glass of wine. Some are important to your comfort in retirement too. No matter who you are, the years leading up to and during retirement contain a number of key financial planning opportunities worth capitalizing on. You and your spouse may hit these dates at different times, so be sure to coordinate before making any decisions.
50 – This birthday brings catch-up provision eligibility in your IRA and certain employer-sponsored plans. Annual or Roth IRA contribution limits increase from $5,500 to $6,500 for 2018. 401(k) and 403(b) salary deferral limits increase from $18,500 to $24,500. Plus, Simple IRA participants can defer an additional $3,000 of salary.
55 – Penalty-free, separation-from-service withdrawals from 401(k)s are now available to you. Health Savings Account participants are also allowed a “catch-up” contribution. For single individuals, annual contribution limits increase from $3,450 to $4,450. For families, the limit increases from $6,900 to $7,900.
59½ – Withdrawals from most retirement accounts without an additional 10 percent tax penalty are now possible. Additionally, those who are still working and looking to diversify by rolling funds from their qualified plan to an IRA may now be able to do so.
60 – Those who have lost a spouse are eligible to collect Social Security survivor’s benefits, assuming the deceased was eligible and the survivor did not remarry.
62 – Social Security eligibility begins, but with reduced benefits. Confer with your adviser to best maximize household benefits.
65 – Medicare eligibility begins. Those not collecting Social Security should enroll in Part A three months before their 65th birthday to avoid a gap in health insurance coverage. Unless you’re covered by an employer-sponsored health plan, enroll in Medicare Part B to avoid future penalties.
66-67 – Full retirement age for Social Security (depending on birth year) provides eligibility for full retirement benefits. Social Security recommends applying for benefits three months before the month you would like them to start.
70 – Maximum Social Security benefits are provided at this age. Don’t wait any longer to receive them.
70½ – The year you turn 70½ is referred to as your first distribution year and required minimum distributions (RMDs) from qualified accounts must begin. The IRS allows the first RMD to be postponed until April 1 of the year following the first distribution year; however, subsequent RMDs are due by year-end of each year.
Withdrawals from tax-deferred accounts may be subject to income taxes, and before age 59½, a 10 percent federal penalty tax may apply. Diversification does not guarantee a profit nor protect against loss. This article is general in nature and provided for informational purposes only. Raymond James and your Raymond James financial adviser do not provide tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.
W. Dale Crossley, JD Financial Planner, RJFS
Evan M. Shear, CFP®, CERTIFIED FINANCIAL PLANNER™
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Material created by Raymond James for use by its advisors. The information contained herein has been obtained from sources considered reliable, but we do not guarantee that the foregoing material is accurate or complete. Raymond James is not affiliated with any other entity listed herein. ©2016 Raymond James Financial Services, Inc., member FINRA/SIPC. Securities offered through Raymond James Financial Services, Inc. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. CrossleyShear Wealth Management is not a registered broker/dealer and is independent of Raymond James Financial Services.