You might think that you are ready for retirement, but there are number of deadlines you must remember to meet if you want to be privy to ever possible benefit. As you enter into retirement, you will have the opportunity to receive Medicare and Social Security. You might even be eligible for a few tax breaks! If you plan on taking advantage of these benefits, but don’t meet the following important deadlines, you might face costly fees and penalties. Be sure to remember the following dates for a smooth transition.
At this age, you have the privilege of deferring taxes on up to $23,000 worth of your 402(k), 403 (b), and Thrift Savings Plan. The same applies to $6,500 of your IRAs as of 2013.
During the calendar year that you turn 55 or after, if you quit, retire, or are laid off you have the option of taking 401(5) withdrawals without having to pay a 10% early withdrawal penalty, but only from the account that is associated with the job that you left or lost. For those in a public-safety career, this applies in the year that you turn 50.
Although you will still have to pay income taxes on traditional IRA and 401(k) withdrawals, once you turn 59 ½ you will longer face a 10% early withdrawal penalty for retirement account distributions.
At the age of 62, you will become eligible to receive Social Security Payments. If you do so, though, you face a permanent 30% reduction in payments. If you decide to work at the same time, all or part of your payments could be temporarily withheld until you are no longer working.
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When you turn 65, you will be eligible for Medicare. For a smooth transition, you have the option do sign up three months before your 65th birthday. That way, coverage will begin the same month you turn 65. If you delay in signing up, your Part D and Part B premiums could increase permanently, and you could possibly face being denied supplemental coverage.
At this age those born between 1943 and 1954 are able to collect the Social Security they have earned. Those born in 1955 time may do so at age 66 and two months. Those born in 1959 may do so at age 66 and 10 months. Once you reach your designated retirement age, you may work and collect Social Security benefits at the same time with no penalty. Those born in 1960 or after who want to sign up at age 66 will face receiving 6.7% money per payment, permanently, than if they just waited until age 67.
If you were born in or after 1960, the Social Security full retirement age for you is 67. Workers that are age 53 or younger must wait until this age to collect full payments in order to avoid an earnings limit.
For each year after you turn 67, your payment amount will increase by 8% until you turn 70. After the age of 70, there is no reason and no benefit to postpone receiving Social Security payments any longer.
Rick Pendykoski is the owner of Self Directed Retirement Plans LLC, a retirement planning firm based in Goodyear, AZ. He brings over 30 years of diverse experience as a financial advisor. Rick takes great pride in giving honest and very experienced advice. Rick can readily converse with business owners and people looking to take control of their retirement accounts.