Most seniors understand that their are certain time frames when they can benefit from their savings (401k/IRA Distributions), social security taxes and Medicare taxes. What we will cover in this article are the basics of each of these different senior financial timelines.
Senior Financial Timelines
Early Penalty Free WITHDRAWAL - 401K
At age 55 there is a time when you can have early distribution from your 401k. If you lose or leave your job, then you can take a distribution from your 401k without the early distribution penalty. This time frame is called “Separation from Service”. It does not exempt you from income taxes, only the 10% penalty.
Penalty Free Retirement WITHDRAWALS
At age 59 1/2 you can take penalty-free withdrawals from any retirement account. These include IRAs, 401k and many of the other financial vehicles that individuals use to save for retirement. One exception is Roth IRA, which you can still withdraw from as long as you have owned the account more than 5 years.
Upon reaching the age of 62, you can begin to receive Social Security benefits. Taking withdrawls at this age will result in a lower amount; however, if you are in a financial hardship, need the money, or don’t know how long you will make it past 62 you can go ahead and cash in on the taxes you have paid.
Our favorite at Medicare Insurance Finders, is the age of 65 when you become eligible for Medicare. If you are still working you may not want to take Medicare Part B due ot the monthly premium, but Medicare Part A is a benefit with no premium that is paid for by your taxes throughout your working career. For Medicare Supplement Quotes go to www.medicareinsurancefinders.com and fill out the quote form that will provide you with instant quotes.
Real Estate Taxes
In most states, real estate taxes are reduced for those that are over the age of 65. This will usually cut your real estate taxes by several hundred dollars each month if not more. Some counties may make this change automatically, while others made to be notified of your “senior” eligibility.
Social Security – Full Retirement Age
Between ages 66 – 67 you can begin reaching full retirement benefits from Social Security, there is an increase over the age of 62. Upon reaching age 70, benefits will no longer be increased for waiting to receive benefits. In other words, start taking your benefits because it does not good to wait any longer.
Required Minimum Distributions
There comes a time when you are required to start withdrawling from your retirement account and this is at age 70 1/2. We highly recommend you consult with a financial planner to make sure you are withdrawling the correct amount and do not get stuck with a hefty tax.
This sums up our senior financial timelines. If you need help navigating the Medicare system don’t hesitate to give us a call at 1-800-800-1397 option 6.