Money milestones
Birthdays aren’t just for the young. Here are some later-in-life rule changes
You hit a lot of milestone birthdays when you’re young. There’s your first birthday, of course, and also the one where you turn 10 (finally, double digits!). At 13, you’re a teenager. At 16, you’re probably thinking about driving. At 18, you can vote; at 21, you can get into bars.
You hit a bunch of milestones later in life as well, and many of them have to do with retirement. Knowing these age milestones can help you better prepare for life after work. They include:
1 Turning 50
It’s catch-up time! People 50 and older can contribute $6,500 more to their 401(k)s or 403(b)s each year, for a total contribution of up to $26,000 this year. Those 50 and older who contribute to IRAs and Roth IRAs can throw in an additional $1,000, for a total maximum annual contribution of $7,000.
2 Turning 55
Normally people have to pay a 10% federal penalty, along with income taxes, when they withdraw money from retirement accounts before age 59 ½. The penalty disappears on 401(k) and 403(b) withdrawals if you’re 55 or older if you quit, get fired or retire. Taxes still apply.
3 Turning 60
For most widows and widowers, age 60 is the earliest that they can begin Social Security survivor benefits. (Survivor benefits are available starting at age 50 for survivors living with a disability, or at any age if the survivor cares for the deceased spouse’s children who are under age 16 or disabled.)
4 Turning 65
At 65, most Americans are eligible for Medicare, the government health care program. Typically, you’ll want to sign up in the seven months around your birthday — meaning the three months before the month you turn 65, the month you turn 65, and the three months after. Delaying after that point can cause you to pay permanently increased premiums. Explaining the ins and outs of Medicare is beyond the scope of this column, but you can learn more at medicare.gov or by calling Medicare at 1-800-MEDICARE (1-800-633-4227) to request the “Medicare and You” handbook.
5 Turning 70
A juicy benefit awaits those who can delay the start of Social Security after full retirement age: Their benefit increases by 8% annually until it maxes out at age 70. This not only means more money for the rest of your life, but if you’re the larger earner in a couple, it also maximizes the survivor benefit for your spouse.