Retirement Planning

Important Birthdays for Retirement Planning

You may have thought the big 5-0 was a milestone, but just wait until you see which birthdays matter in retirement. Hint: think penalty-free withdrawals and Social Security benefits.

Birthdays That You'll Need to Remember Going into Retirement

Remember turning 16 and getting your driver's license? What about being able to vote at 18? As you become older, you might find that there are fewer milestone birthdays in life to circle on the calendar.

But did you know that there are certain birthdays as you approach retirement age that can have an effect on your taxable income, healthcare eligibility, and retirement benefits? While they might not be as exciting or have the same wow factor as birthdays when you were a kid, there are certain birthdays as you become older that you should begin to take note of during your retirement planning.

Age 59½

Withdrawals taken from your individual retirement accounts (IRAs) prior to age 59½ are typically subject to a 10 percent federal income tax penalty. And while they may not be baking you a cake, the IRS is giving you reason to celebrate turning age 59 ½ by allowing you to begin taking penalty-free withdrawals from your IRAs and other qualified retirement plans as long as certain conditions are met.

Age 62

When you turn age 62, you are eligible to receive your Social Security benefits. However, if you take them at age 62 (considered early), your benefits will be reduced by up to 30 percent. To receive your full benefits you must wait until you reach your full retirement age - which can be anywhere from 65 to 67 depending on the year you were born.

Age 65

Turning age 65 qualifies you to enroll in Medicare. When you begin to receive your Social Security benefits, you are automatically eligible for Medicare Part A hospital insurance benefits. However, Medicare Part B benefits are strictly voluntary and require a monthly premium. In order to obtain coverage at the earliest possible date, you should try to enroll about two or three months before you turn age 65.1

Age 70½

When you turn age 70 ½, you must begin taking minimum distributions from most of your tax-deferred retirement plans. These distributions are mandatory! If you don't take them, you could be facing a 50 percent penalty on the amount that should have been withdrawn. Annual required minimum distributions are calculated according to life expectancies determined by the federal government.

1 Medicare & You 2015, U.S. Department of Health and Human Services

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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

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Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax‐related decisions. For information about Protective Life and its products and services, visit www.protective.com.

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Retirement Age

As you approach retirement age, there are certain birthdays that you should be aware of that can have an effect on you healthcare eligibility, retirement benefits and taxable income. This article summarizes certain retirement ages that you need to know about. For more information, visit our learning center.

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