4 Important Pre-Retirement Birthdays to Plan for Strand Life Wealth

There are several key birthdays that significantly impact the future of your retirement. Your pre-retirement plays a major role in how successful the rest of your retirement is, and there are key dates and age milestones to plan for that will help set you up for a successful retirement. Here are four crucial ages to bear in mind while shaping your financial future:

 

  1. Age 50: Catch-Up Contributions

Once you hit the 50-year mark, you’re allowed to put a larger amount into your retirement funds than what was permitted during your younger years.[1] In 2023, those who are 50 years old and above with a 401(k) can allocate $30,000 to their account, which is $7,500 more than the usual limit for those aged 49 and below.[1] As for IRA account holders, they can allot $7,500 annually to their accounts.[1]

 

  1. Age 59 ½: Penalty-Free Withdrawals

Most retirement funds permit penalty-free withdrawals once you’ve attained the age of 59 ½.[1] Early withdrawal, prior to this age, usually results in a minimum of 10% tax penalty on top of any other applicable taxes connected to the withdrawal.[2] Certain funds do offer the flexibility of penalty-free withdrawals under certain circumstances before you reach 59 ½.[3] You can also avoid fees if you qualify for a hardship withdrawal.[4] But, in most scenarios, you’ll have to wait until 59 ½ to withdraw from your retirement accounts free of penalties.[1]

 

  1. Age 62: Claiming Social Security is an Option

Determining the right time to apply for Social Security can be a complex issue. The minimum age requirement to start claiming is 62 years old.[1] However, at 62, you are not deemed to have reached the “full retirement age,” so your Social Security claim won’t be at its maximum value and your subsequent payouts will be less.[1] Nevertheless, you have the option to start claiming at 62, should it align with your financial strategy.

 

  1. Age 65: Medicare

The opportunity for Medicare enrollment begins three months prior to your 65th birthday.[1] A total of seven months is allotted for you to choose your enrollment destination: this includes the three months leading up to your 65th birthday, the month in which you turn 65, and the subsequent three months following your birthday.[1]

 

There are numerous elements and significant dates involved in retirement that you might not be aware of, especially when it comes to outlining your retirement roadmap during your pre-retirement years and beyond. If you realize you don’t have a fully comprehensive retirement timeline planned, contact us today for a complimentary evaluation of your financial situation.