Age Milestones for Retirement Planning Decisions
In our youth, we thought about turning 16 so we could drive, 18 to vote (and drink in many states) or 21. As baby boomers, entirely different set of age milestones is presented, most of which relate to retirement planning. Do you think about these? I do, but mostly for investigational purposes. I try not to get caught up in thoughts such as “I can’t wait until I am old enough for Medicare.” I want to be mindful and present for the enjoyment of today. (If this sounds to you a little like a Zen state of mind, you are correct. There will be more about my recent Zen explorations in a future post.)
Age 59½: Beginning at this age, we can begin penalty-free withdrawals from our various tax-deferred retirement accounts, e.g., 401(k) and IRA accounts. Hopefully, this decision is not one that is forced by economic necessity.
Age 62: At this age we can start collecting Social Security retirement benefits but at an amount reduced by 25% compared to what we can receive at full retirement age. I turn 62 in 7 months. I concede that it will be strange knowing that I could receive Social Security then if I wanted it.
Age 65: This is the age of eligibility for Medicare. This age is actually a bit tricky. We will have a seven-month window of opportunity to sign up, beginning three months before our 65th birthday. We do not have to enroll in Medicare if we are still covered by employer health insurance. Otherwise, missing this window could cause you to have larger Medicare premiums for the rest of your life.
Age 66: This is full retirement age for those of us born between 1943 and 1954. At this age we are entitled to 100 percent of our Social Security retirement benefit. Also, at this age we are no longer penalized by working for other income and, if your benefits were reduced by working earlier, your benefit amount will now be adjusted upward to compensate.
Age 70: If we wait until this age, our Social Security benefit is maximized to 132% of our benefit at full retirement age. This is my goal and we will spend other retirement assets as needed to achieve it.
Age 70½: Retirees at this age must begin “required minimum distributions” from tax-deferred retirement accounts (except for Roth IRAs).
Age 85: Many so-called longevity insurance policies a/k/a deferred annuities begin payments at this age. I am going to take a serious look at buying one of these policies as a retirement planning strategy. Knowing that this benefit will be available, we can spend our other retirement assets without being afraid of running out of money when we are much older. It’s all about the peace of mind that flows from risk management.
Now I have to take care of my health so I will be around to experience these milestones!
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