As you may already be aware, the earliest someone can begin drawing Social Security benefits is at age 62. As you enter the red zone for retirement or perhaps are already retired, I want to share three less common retirement age milestones that are important pieces of your overall financial plan.
The first of these is the age of 50. Once you turn 50, the IRS currently allows you to make yearly “catch-up contributions.” These are additional amounts you can contribute to your 401(k)s and IRAs above and beyond the standard annual limits for people under the age of 50. This benefit is designed to help you save additional money for retirement. Not enough pre-retirees take advantage of this, perhaps because they are unaware that they are allowed to.
The next milestone occurs at age 65. Most Americans qualify for Medicare at this age, which covers a sizable portion of doctor visits, hospital care and other medical services. However, navigating the enrollment and benefits for each part can be cumbersome, so consider seeking guidance from a healthcare or Medicare specialist.
The last milestone I want to share with you is at age 73. This is when you enter the Required Minimum Distribution (RMD) stage. One of the benefits of contributing to 401(k)s and IRAs during your working years is that it lowers your taxable income, therefore it lessens your tax burden. However, you are not allowed to keep growing your retirement savings tax-free forever. The government eventually wants to tax it. Per the current IRS guidelines, you will have to start taking portions of money from your retirement funds by no later than age 73 and pay taxes on those distributions.
These are just a few ages that contain important planning components of which you might not be aware. At the end of the day, you do not know what you do not know, and learning things that you were not aware of can enhance your savings and goals and keep your financial plan on track.
Securities offered through LPL Financial. Member FINRA/SIPC. Marzano Capital Group is another business name of Independent Advisor Alliance, LLC. All investment advice is offered through Independent Advisor Alliance LLC, a registered investment advisor. Independent Advisor Alliance is a separate entity from LPL Financial.
