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Retirement Timeline.

Important Retirement Timeline Items:

To make the most of your retirement benefits consider these important age-specific items into your retirement planning:

Age 50:  Workers age 50 and older can defer more income into their 401(k) and 403(b) plans, federal government Thrift Savings Plan and contributory IRAs. 

Age 55:  If you leave your job in the calendar year you turn 55 up to age 59 1/2, you can take 401(k) withdrawals from your company retirement account without triggering the 10% early withdrawal penalty.  However, if you roll the money into an IRA, you’ll have to wait until age 59 1/2 to avoid the penalty unless you structure substantially equal payments for at least five years. 

Age 59 ½:  You can make distributions from IRAs without penalty however income tax will be due on withdrawals. 

Age 62:  Some workers are eligible to begin Social Security income but payments are permanently reduced by as much as 30%.  If you work and simultaneously collect Social Security at age 62, part or all of your payments may be temporarily withheld. 

Age 65:  Sign up for Medicare up to three months before your 65th birthday so coverage can start as early as the month you turn 65.  If you do not sign up on time (or within eight months of leaving a job with group health coverage), your Medicare Part B and D premiums could permanently increase; you can also be denied for supplemental coverage. 

Age 66:  Baby boomers born between 1943 and 1954 are first eligible to collect unreduced Social Security payments. If you were born in 1955 or 1956, full retirement is age 66 and two months; if your year of birth is 1959, full retirement is age 66 and ten months.  Once you reach full retirement age, benefits are no longer withheld for work at the same time. 

Age 67:  The Social Security full retirement age is 67 for everyone born in 1960 or later. 

Age 70:  Social Security payments will increase by about 8% per year if you delay starting benefits up until age 70.  After age 70, there is no additional benefit to wait to claim Social Security.

Age 70 ½:  Required Minimum Distributions (RMDs) from IRAs and 401(k)s begin.  Income tax is generally due on each withdrawal.  Employed individuals can delay distributions from their current 401(k) until April 1 of the year after they retire (unless they own 5% or more of the company sponsoring the plan).  People age 70 ½ and older are no longer eligible to get a tax deduction for traditional IRA contributions but can contribute to Roth IRAs if they have earned income.