When you think of milestone birthdays, you might remember becoming able to drive at 16, eligible to vote at 18, or allowed to purchase alcohol at 21. As we grow older we don’t pay as much attention to our birthdays, since there doesn’t seem to be any special significance attached to them. However, when retirement rolls around, there are several important birthdays you need to keep in mind. These are attached to your eligibility for various retirement-related programs and benefits, according to the law:
Age 59 ½. Before this date, taking any distributions from a qualified IRA or other retirement plan may carry a 10 percent federal income tax penalty. After age 59 ½, you can begin withdrawing from your retirement plan without any additional penalties, though of course normal income taxes will still apply. Mark this date on your calendar, and try to postpone any withdrawals until afterward.
Age 62. You’ve paid into Social Security most of your life, and you’re looking forward to retiring and collecting your hard-earned benefits. On your 62nd birthday will be your first chance to do so. It is not, however, considered “full retirement age”, so your benefits may be reduced by as much as 30 percent. Your full retirement age is between 65 and 67, according to the year you were born. Check with the Social Security Administration to find out your full retirement age, and consider waiting until that date to retire in order to collect a larger monthly check.
Age 65. On your 65th birthday, you’ll become eligible for Medicare. Since the enrollment process can take some time, remember to file your application several months ahead of your actual birthday so that benefits can begin as soon as you’re eligible. Medicare Part A Hospital Insurance is automatically available to those receiving Social Security benefits. Medicare Part B Medical Insurance can be purchased at a monthly premium.
Age 70 ½. When you reach this half-birthday, most tax-deferred retirement plans require you to begin taking distributions. Failure to do so can put you at risk of having to pay a significant penalty. The federal government determines the amount of your required minimum distribution, based on life expectancy.