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The Five Most Important Ages When Preparing for Retirement

Age 50.
This is the age at which you become eligible to put more of your wages into your 401(k) and IRA accounts, the so-called "catch-up contributions," and to receive any matching employer contributions on those catchup amounts.

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Age 59 ½.
With certain limited exceptions, if you take a distribution of your pension before age 59 ½, you will pay a 10% early withdrawal penalty in addition to the income tax otherwise payable on the distribution. If you wait until after age 59 ½, you will get to keep an additional 10% of our pension money.

Age 65.
You are eligible to sign up for Medicare during the seven-month period starting three months before your 65th birthday. It is important to sign up on time to avoid any late enrollment penalties that could permanently impact your premiums.

Age 66.
If you were born between 1943 and 1954, you are eligible for full Social Security benefits at age 66. For every year born after 1954, add 2 months to your full Social Security retirement age. You Social Security benefits will be permanently reduced if you commence receiving them before your full Social Security retirement age, and permanently increased if you commence receiving your benefits after your full Social Security retirement age].

Age 70 ½.
Whether you want to or not, you are required to take distributions from your IRA, 401(k), and Roth 401(k) after age 70 ½. There is an exception for 401(k)s if you are still working. However, in order to qualify for the exception you must (i) be considered employed throughout the entire year, (ii) own no more than 5% of the company, and (iii) participate in a 401(k) plan that allows you to delay distributions.

As you can see, you will need to make a number of important retirement-planning decisions in the 20-year period between age 50 and age 70. Still not sure what to do? I suggest you make an appointment with a fee-based financial advisor who should be able to give you some direction.

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