Important Birthdays Over 50
Once you hit a certain age, birthdays may not feel as important as they once did. But there are still plenty of birthdays that have significant financial importance. Keep in mind these upcoming birthdays and how they could impact your financial decisions.
Age 50
No, you aren’t at retirement age just yet, but you can start to take advantage of some financial benefits. For one, if you’re in a qualified retirement plan, you can start making catch-up contributions on top of your annual contributions. Catch-up contribution limits for 2024 are as follows:
| Plans | Catch-up Contribution Limit |
|---|---|
| 401(k), 403(b), 457 | $7,500 |
| SIMPLE IRA, SIMPLE 401(k) | $3,500 |
| IRA, Roth IRA | $1,000 |
Using these catch-up contributions to your advantage means that even as you get closer to retirement, you can continue saving more for your future.
Age 59½
Why is a seemingly random age like 591⁄2 so important? It’s because you’ve finally reached the age where you can begin making withdrawals from qualified retirement plans without incurring the 10% federal income tax penalty. You’ve spent so many years contributing to your retirement account, now it’s time to start reaping the benefits.
Just remember that if you withdraw from a traditional IRA, 401(k), or other employer-sponsored plan, you may be subject to ordinary income tax.
Age 62
You’ve seen Social Security deducted from your paycheck for decades. At age 62, you can finally start taking the benefits you’ve paid into all of those years. Social Security benefits will pay you monthly based on several factors, including how many years you’ve worked and how much you’ve earned. Keep in mind that if you’re still working your benefits may be reduced.
Even though you’ve reached Social Security age, it’s important to understand that the longer you wait to take benefits, the more money you may receive. A financial advisor can help you determine when the most optimal time to take benefits for your specific financial situation.
Age 65
No more searching for healthcare on the marketplace or worrying about your employer’s plan, because now you’ve reached Medicare age! While you can’t start a Medicare plan until 65, you can apply for your new healthcare through the Social Security Administration up to three months before your birthday. Although, if you’re already taking Social Security benefits, you’ll be automatically enrolled in Medicare Part A and Part B without an additional application.
Age 70
If you’ve delayed taking Social Security until now, your benefits will stop increasing. Since there is no longer an advantage to waiting for your payments, it’s finally time to begin taking Social Security. This can be important for your future planning to know that regardless of whether you need the payments today, you’ll begin taking benefits at age 70.
Age 73
Until now, you could choose whether or not to take distributions from your retirement accounts. But now at age 73, you’ll need to take required minimum distributions (RMDs). RMDs won’t eliminate your ability to contribute to your retirement plan, as long as you meet the earned income requirement.
Time flies
Preparing for retirement doesn’t just mean understanding the destination, it also requires knowing the important milestones along the way. Knowing these important ages can help you prepare for what’s coming and how you can optimize your financial life for years to come.
For more detail, reach out to us directly so we can help guide through these changes, and help ensure you’re making well considered tax decisions.
V24010085