Do you have any questions about why we provide our services on a regular basis? It’s easy to understand: Things change!
It’s not uncommon to put things off andin order to avoid having to complete tasks. This is why we’re here to serve as your accountability and a partner. We’re not only discussing that insurance or estate planning audit you’ve put off. (Although we get it that, and that’s why our annual calendar of services is!)
Beyond the task of keeping track of all your obligations every year Certain crucial moments in our lives call for an annual financial plan check-inand they’re common. This means that they’ll creep into your life! Therefore, whether you’re approaching any of these milestones or simply planning ahead to get the most out of it, make sure you check the details below. Make sure to make sure to mark a date on the calendar in case you’re approaching a significant event in your life!
Catching Up at Ages 50 & 55
Have you had a delayed beginning with the retirement funds you have saved? Have you noticed a recent decline in your balances? Perhaps you’re in need of an extra boost? At 50, you have the option to boost contributions to retirement savings within your IRA along with the contributions to your 401(k) as well as a similar accounts. Next up, age 55 gives you extra contribution room in your HSA. Find the catch-up amount for this year’s tax year in the 2023 contribution limits.
Early Withdrawals for Those 55 and Up
Do you plan to retire in the mid- to late 50s? If you’re on the verge of financially independent retirement couple of years prior to reaching a “traditional” age, like 65, you may want to be aware of this. It’s because when you retire leaving, or quit your job before the age of 55, you may be able to draw money out of the 401(k) that you have with your previous employer, and avoid the penalty of 10. This is only applicable to the 401(k) via the most recent employer.
Withdrawing at Age 59.5
Do you plan to work longer than 55? If you reach age 59.5 and above, you can take money out of the IRA as well as 401(k) tax-free. This means that you’ll be able to avoid the 10% penalty would otherwise be imposed. You can also make use of these benefits while employed by your employer. Be aware that the withdrawals you make are taxed as regular income, which means you could be in a higher tax bracket the time you add your regular income with the withdrawals that you haven’t yet been taxed until now.
Social Security at 60 and 62
In the event that you married, and divorced, then you might be eligible to claim Social Security benefits. The widows and widowers who survived are able to claim these benefits at any time before age 60.
The age of 62, on the contrary, is the oldest age that anyone who has enrolled in Social Security can claim their own benefits. While this might not be ideal for certain due to the fact that Social Security benefits increase a small amount for every month after 62, if you wait to claim the benefits, those who require this money have the chance to claim. If you can hold off more, Social Security benefits increase by an astounding 8 percent per year following the date they reach the age of full retirement (FRA) -And where else will you earn an 8percent return on your an investment?
Medicare at Age 65
This shouldn’t seem like a shock as it’s a typical retirement age. Did you know that you do not need tobegin Medicare at the age of 65? Should you, or a spouse are employed and you’re enrolled in your employer’s or your own health insurance plan, you could be able to stay in it. This is especially appealing in the case that your employer pays the entire or a large portion of cost. While you aren’t eligible to start Medicare at age 65, you may be able to bridge the gap between early retirement date and Medicare age by purchasing a health plan offered through the health marketplace or individual coverage.
Full Retirement Age Between 66 and 67
We understand that you are able to completely end your retirement anytime at any time as long as you have the funds and have a plan to retire at any age. However, ages 66 and67 is considered to be the Social Security Administration (SSA’s) established ages for people who haven’t yet reached the age of 70 (more about this later). Based on the year you were born as well as your birth date, your “full” retirement age that the SSA will determine for you could be 66, or 66 and some months, or even 67. This is the age you are eligible for the “full” Social Security benefit that is, it’s not diminished if you claim prior to your FRA. However, wait … it’s not over!
Maximum Social Security Benefit at 70
Did you remember what we mentioned earlier about the 8% increase of Social Security benefits for each year you are waiting to claim following the completion of your FRA? All good things have to be a part of the process and the increase ceases at the age of 70. Once you reach this age then the Social Security benefits you’ve earned will cease to increase and you’ll be able to begin receiving monthly checks. Do you really need them? It’s not enough to say”no,” but you could certainly conserve any money aren’t needed to fund your life.
QCDs at 70.5 and RMDs at 72 (or 73 or 75)
The two milestones above are referred to as an “can” and a “must.” You are able to make charitable distributions that are eligible from your IRA beginning at 70.5. This means that a contribution to a qualified charity by the IRS can be made from your IRA tax-free and the charity gets the whole amount. What you aren’t able to do is take these funds out, and make yourself the intermediary, and then give the entire amount to charity. This is because the taxman is a third party in this situation.
At the age of 72 (or 75 or 73 as a result of legislation known as the SECURE 2.0 Act) You’re obliged to make distributions from qualified accounts, such as those in your IRA or 401(k). The Treasury wants that money to be circulating and not secluded in retirement accounts in the end!
Are any of these milestones resonate with you? Tell us about it, and we’ll make it one of the key dates in your budget. You can also include it in your RightCapital to send you reminders in the lead up on the date. The reminders can be great as a way for you to book for a meeting so we can talk about the implications for you and then plan the next actions.
In the coming blog, we’ll be focusing on five crucial financial planning events for children. If you have children at home or a child who is a part of your life (or in the near future! ) You won’t wish to miss out on it!
