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ArticlesFinancial MilestonesBy Kim Boyer A birthday may raise or lower your tax bill, make your eligible for benefits or require you to take some action. If you forget, you could miss out on a tax break or get an unpleasant surprise. Two financial planners in Washington, Alexandra Armstrong and Karen Preysnar, put together a list of key milestones, which include the following: Age 50 Catch-up time for workers. The tax law allows those who will turn 50 or older by the end of the year to save a little something extra in tax-deferred retirement savings plans. Age 55 At 55, you can tap an employer-sponsored retirement plan without paying a 10 percent penalty on top of regular income taxes. The catch is you have to leave your job. This rule does not apply to IRAs. Age 59 1/2 This is the magic age at which you can begin taking money from individual and company retirement plans without paying a 10 percent tax penalty. There are a few exceptions to this rule for those who cannot wait, but it is only the penalty, not the income taxes, that can be avoided. Age 60 If you have no dependents and are not disabled, this is the earliest age at which you may be able to draw Social Security survivor benefits. Age 62 This is the earliest age at which you can draw Social Security retirement benefits. However, you may want to wait because benefits are permanently reduced when you start collecting at an age younger than your full retirement age. The Social Security Web site (www.ssa.gov) has a calculator to help determine whether it is better to start collecting or to wait. Age 65 Medicare enrollment time. Sign up for Part A if you are eligible; it is free for most people. If you are still working and covered by health insurance, you might want to wait to apply for Part B, which has to be purchased. Check with Medicare and your health plan to avoid gaps in coverage. Age 65-67 Full retirement age for Social Security benefits. If you were born before 1938, you can get full benefits at 65, but those born later will have to wait. The retirement age increases gradually to age 67 for those born after 1959. At full retirement age, you get to collect full benefits and you avoid having your benefits reduced based on your earnings. Age 70 You can boost the size of your Social Security benefits by waiting longer to start collecting them. You get credit for each month that benefits are delayed up to age 70. In addition, if you continue working, your benefits may increase based on the additional years of income. Age 70 1/2 You must begin minimum withdrawals from your IRA and most retirement plans by April 1 of the year after the year you turn 70 1/2 . An exception: People who are still working may be able to delay distributions from their current employer’s plan.
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