Age Milestones Important In Your Personal Financial Planning2 min read

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Article borrowed from LJI Wealth Management’s newsletter – We hope this finds you well. Last month, we outlined several year-end tax moves that could make a difference when you file your 2014 taxes by April. Along with delivering this month’s LJI Newsletter, this month we wanted to outline several age milestones which will present potential planning opportunities for 2015.
Age 50 – You can increase your annual contribution to your 401k by $5,500, while those contributing to a Roth or Traditional IRA can add an additional $1,000. With retirement rapidly approaching, this offers up a great opportunity to supercharge your savings down the homestretch.
Age 55 – If you have a 401k that is still with a past employer, you can now access it without the 10% early withdrawal penalty. Keep in mind that you will still pay ordinary income tax on the withdrawals, but this could help you bridge the gap until you are eligible to draw from your IRA(s) or Social Security.
Age 59 ½ – At this point you are able to withdraw money from your IRA without paying the 10% penalty for being under age. While there is no penalty, withdrawals will still be taxed as ordinary income, so some caution is warranted.
Age 60 – You may be eligible for Social Security Survivorship benefits if you are a widow or widower. If you are eligible, be aware that taking SS at the soonest eligible date will reduce your benefit by as much as 28.5%.
Age 62 – You are eligible for reduced Social Security benefits, but benefits will be permanently reduced by up to 25%. Like the survivorship benefit, you may need help analyzing whether taking it early at a reduced benefit makes sense.
Age 65 – Medicare is now a part of your overall healthcare decision. If you happen to be contributing to a Health Savings Account, you are no longer able to do so. The upside is that you can take money from the Health Savings Account for any reason without penalty. Taxes on withdrawals will still apply. It is also important to consider the numerous Medicare Supplements that are available. While choice is generally good, there can be a lot of confusion as to the type of coverage you need and the costs involved. If you do not feel you have the expertise to make an informed decision, we can get you in contact with an expert who is able to do so.
Age 66 – This is full retirement age and many planning opportunities will await those that did not take the early Social Security payout. Please consult with LJI regarding some of these options, as they can be very beneficial to you and your spouse.
Age 70 – Even if you are still working, this is the age that will give you the maximum Social Security payout. Benefits will no longer accumulate at this point.
Age 70 ½ – While age 59 ½ allows you to access your IRA penalty free, age 70 ½ means that you must starting taking Required Minimum Distributions from your retirement accounts, including both IRA’s and 401K’s (no need to take from your Roth IRA). There is some flexibility with regards to your first distribution, but we recommend you talk with us in order to make an informed decision. If you are charitably inclined, there are some planning techniques that can be incorporated with this distribution as well (pending Congressional approval for 2015).
Should you or your loved ones have any question regarding the above, please do not hesitate to contact LJI. www.ljiwm.com

By Simons Bitzer



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