If you’re like many people in their 50s and early 60s, you may have just embarked on a satisfying new career, or are finally enjoying the perks within your current one, and have no plans to slow down anytime soon. Maybe you’re thinking, “Retirement? That’s for old folks!”
But whether you’re years away from retiring, eyeballing the day you can start tapping your 401(k), or already in retirement, now is a great time to brush up on the benefits you’re entitled to and when they take effect.
How to Catch Up on Your Savings
At 55, you can start setting aside an extra $1,000 in a tax-deferred Health Savings Account, which you and your family can use for doctor co-pays, medical bills, physical therapy, vision and hearing expenses, dental work, and prescription medicines that, according to the IRS, health insurance often doesn’t cover. Unlike the similar Flex Spending Account, unused HSA balances even roll over year to year.
Also, if you still work for a traditional employer and contribute to a tax-deferred IRA, Roth IRA, or 401(k), you may be able to put away an extra $5,500 a year starting at age 50. These are called “catch-up contributions.”
When You Can Tap Retirement Accounts
Age 59½ is generally when you can start collecting distributions from your 401(k) or IRAs without penalty. (Prior to that there’s a 10% penalty with some exceptions.) For those born between 1943 and 1954, Social Security benefits typically start paying out at 66, although you can opt to receive them as early as 62 or as late as 70.
Holding out till age 70 entitles you to an additional 8% a year for every year past your so-called full retirement age, but you might not want to wait. Consult the Social Security Administration for specific rules and exceptions.
Once you blow out the candles on your 50th birthday cake, it’s a good idea to start using birthdays as mile markers for the above mentioned and other public programs, like Medicare. Even if you don’t feel like giving up the 9-to-5 to practice your putting, there are money-saving opportunities to be had at nearly every other birthday.
“Your Nifty-After-Fifty Birthday Benefits” – Retirement Milestones You’ll Hit Starting at Age 50
|Start making catch-up contributions to tax-deferred IRAs and 401ks
|Save an extra $1,000 / year in an HSA to pay for medical expenses
|You can withdraw from your IRA or 401(k) without a tax penalty. Income tax may apply.
|You become eligible for Medicare
|Full retirement age: receive Social Security Income (for those born between 1943 and 1954)
|Must start taking required minimum distributions from qualified retirement account without incurring a 50% penalty
Your Retirement Reality Tip
Check out this Retirement Toolkit, from the Department of Labor, the Social Security Administration and the Centers for Medicare & Medicaid Services, for a list of publications and interactive tools to help in planning for your retirement.