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Retirement Numbers That Really Matter

Age may be "nothing but a number," but when it comes to retirement planning some of those numbers are very important. 


When you leave Military Service: The Social Security Administration tells us full retirement age, commonly called normal retirement age had been 65 for many years for Americans. However, beginning with people born in 1938 or later, that age gradually increases until it reaches 67 for people born after 1959. The Society of Actuaries (SOA) tells us that a 65-year-old female could expect to live approximately 20 years in retirement. A 65-year-old man in the U.S. in 2010 is a little more than 17-1/2 years. Transitioning Servicemembers and Veterans retire from military service as early as age 38. Unless they are disable, they transition to work in the private sector for another 20 years or so. The good news for those that retire early is that they are settling into 40 years or so in retirement. The bad news…the intensity of fear of outliving their savings. This happens as the lifetime income the military provides based on a certain percentage of their basic pay simply is not enough. 


Transitioning Servicemembers should look forward with retirement planning strategies. Here are a few age milestones that it pays to be aware of, whether you are already retired, or transitioning toward retirement.


When you turn 50: You can sock more money away toward retirement in 401(k), 403(b), IRA and other retirement savings plans. ‘Catch-up’ contributions can help you make up for lost time, if you find yourself behind in your retirement savings, or if you want to power up your savings down the home stretch. Retirement Planning Annual Limits for Roth IRAs, 401(k), 403(b), or 457 plans.


When you turn 55: If you leave or lose your job in the year you turn 55, you might be able to withdraw money from a tax-deferred savings plan without paying a 10-percent tax penalty. This can happen if you qualify for one of the exceptions listed in the federal tax code. At 55 you also may be eligible to receive pension benefits from some employer plans, if you've accumulated enough years of service at your company.


When you turn 59 ½: You usually can withdraw money without owing a 10-percent tax penalty from your personal tax-deferred plans, such as IRAs/annuities, and from your employer-sponsored savings plans like a 401(k) provided you've retired/left your job.


When you turn 60: You can receive reduced Social Security benefits if you are a widow or widower, though it is often in your best financial interest to wait, if you can.


When you turn 62: You may be eligible for full pension benefits from your employer, depending on the plan. And, if you choose, you can begin to receive reduced Social Security benefits. "Reduced" means you'll receive 20 to 30 percent less each month than if you wait until you reach your full retirement age—and your spouse's benefit may be reduced even more. 

 
When you turn 65: You can receive full pension benefits from most employers. And you normally qualify for Medicare benefits. For Social Security, 65 used to be the age to be eligible to receive full Social Security benefits. However, if you were born after 1937, your eligibility depends on the year of your birth. The age at which widows or widowers become eligible to claim full survivor benefits similarly used to be 65. But now, if you were born after January 2, 1940, your eligibility depends on the year of your birth.


When you turn 67: If you were born in 1960 or later, 67 is the earliest age at which you can claim full Social Security benefits.


When you turn 70: You should begin to collect your full Social Security benefits, if you haven't already. There is no additional benefit increase after you reach age 70, even if you continue to delay taking benefits.


When you turn 70 ½: IRS rules mandate that you take your first required minimum distribution, or RMD, by April 1 of the year following the calendar year in which you reach 70 ½ years of age. For each subsequent year after you begin taking RMDs, you must withdraw your distributions by December 31. The amounts you withdraw typically count as taxable income unless you already paid taxes on your contributions. You must make withdrawals from your traditional IRAs, but not from Roth IRAs. You also must begin withdrawing funds from employer-sponsored retirement plans, such as a 401k, unless you're still working.