When we’re young there’s always a birthday to look forward to, whether it’s
for getting a driver’s license at 16 or being able to buy a drink at 21. But
there comes a point where most people stop looking forward to the next birthday.
But if you’re approaching retirement age , there are several birthdays at
which certain benefits and entitlements kick in, giving you something to look
forward to as you hit your golden years. Here are six age milestones to mark on
your calendar:
Age 59½
You may have been in preschool the last time you counted half birthdays, but
the Social Security Administration still does. When you turn 59½, you can
celebrate by starting your withdrawals from your retirement plan or IRA. You can
finally do so without being subject to the 10% penalty you’d generally have to
pay at a younger age.
Age 60
This is the earliest that a widow or widower can collect benefits from Social
Security (if the surviving spouse is disabled , this benefit kicks in at age
50). As a general rule, over the course of a lifetime early survivor’s benefits
will give about the same total as regular Social Security survivor’s benefits.
However, the installment amounts will be smaller to take into account the longer
period you will receive them.
As a survivor, you can receive these benefits at any time between your 60th
birthday and your full retirement age. However, the earlier you start, the more
your survivor’s benefits are reduced—they will dwindle at a fraction of a
percent for each month before you reach your full retirement age.
Age 62
Regardless of when you reach your full retirement age, you can choose to
begin receiving Social Security retirement benefits at age 62. However, if you
start taking benefits before your full retirement age, those proceeds will be
reduced.
If your full retirement age is 67, then your starting benefits will be
reduced by 30%. That percentage goes down the closer you get to your full
retirement, with a 6.7% reduction for withdrawing at age 66. Age 62 also marks
the point when you are old enough to qualify for a reverse mortgage.
Age 65-67
Sometime between the ages of 65 and 67 is when you’ll reach your full
retirement age, which is when you can begin to collect full Social Security
benefits. When your specific retirement age hits depends on how old you are. It
was 65 for anyone born in 1937 or earlier, and is gradually increasing to age 67
for anyone born in or after 1960. You can use this chart from the
Social Security Administration to determine your exact retirement age.
Age 70
If you don’t need to dip into your Social Security benefits when you hit full
retirement age, you can delay your retirement, and your benefits will be
increased based on your birth date. However, once you reach age 70, the benefit
increase no longer applies, even if you continue to delay taking benefits.
Age 70½
Another half birthday to celebrate, this one at age 70½, is when you must
begin taking your required minimum distributions from your IRAs , whether you’ve
retired already or not. RMDs apply each year beginning with the year the account
owner turns age 70½. The distributions are calculated by dividing the IRA
account balance as of December 31 of the prior year by the applicable
distribution period or life expectancy.
In order to figure out your applicable distribution period or life expectancy
you can use the tables supplied by the IRS’s website (see appendix C).
