No matter where you are in life, there’s steps you can take towards helping create a secure financial future. Consider these milestone ages of retirement planning as you review your unique situation with CKS Summit Group.
Retirement benefits have different ages in which you can begin receiving benefits. Once you reach your full retirement age, your Social Security benefit will be recalculated to give you credit for the benefit withholding and your continued earnings.
Keep these ages in mind to boost your savings down the road.
The full retirement age used to be 65 for those born in 1937 or earlier. Those born between 1943 and 1954 have a full retirement age of 66. The full retirement age further increases in two-month increments each year to 66 and 10 months for those born in 1959, up from 66 and eight months for those with a birth year of 1958.
The full retirement age for those who turn age 62 in 2022, born in 1960, is 67. The full retirement age will remain age 67 for everyone born in 1960 or later.
Workers who are eligible for Social Security can start payments at age 62, regardless of their full retirement age. However, the benefit reduction for early claiming is bigger for those who have an older retirement age.
Workers born in 1960 will see their monthly payments reduced by 30% if they sign up for Social Security at age 62, compared to a 29.17% benefit reduction for those born in 1959 and a 25% decrease for those born in 1954. For a worker eligible for a $1,000 monthly Social Security benefit at his full retirement age, claiming at age 62 will reduce his monthly payment to $750 if his birth year is 1954 and $700 if he was born in 1960.
In other words, you get less if you start early or more if you delay until later, every month you delay Social Security up to age 70 gets you a higher monthly payment for life. Which brings us nicely to our next milestone…
Social Security payments increase by 8% for each year you wait to start your payments between your full retirement age and age 70. After age 70, there is no additional benefit to waiting to sign up for Social Security. You’ll get an extra 2/3 of 1% for each month you delay after your birthday month, adding up to 8% for each full year you wait until age 70. It’s important to take advantage of these benefits and boost your social security.
For example, if you were born on April 24, you’d reach your full retirement age on April 1. If you wait until May to take your benefits, you’ll get 100.7% of your full retirement benefit. Wait one year and you’ll get 108% of your benefit. You can earn delayed credits until age 70, when you’d receive 132% of your full retirement benefit.
Those over age 72 are typically required to take annual withdrawals from 401(k)s and traditional IRAs and pay the resulting income tax bill. The penalty for missing a required minimum distribution is a stiff 50% of the amount that should have been taken out.
Your first distribution must be taken by April 1 of the year after you turn 72. After that, annual withdrawals are due by Dec. 31 each year. Those who delay the first withdrawal until April will need to take two distributions in the same year, which could result in a big tax bill that year.
However, there are several exceptions to the required IRA and 401(k) withdrawal age. If you continue to work after age 72 for a company you don’t own, you can delay 401(k) withdrawals from the retirement account at that job until you actually retire. A qualified charitable distribution from an IRA directly to a qualifying charity can also satisfy the minimum distribution requirement. Roth IRAs don’t have withdrawal requirements in retirement.
By taking control of how you approach retirement, saving early on in life, and continuing to invest in a reputable financial advisor, you can maximize your earnings that will leave you retiring comfortably.
At CKS Summit Group, we design, build, and manage custom retirement portfolios that are fully capable of simultaneously generating stable growth, increasing income, and preservation of principal throughout a client’s lifetime, with only limited downside market risk.
Ready to get a head start on retirement? No matter where you’re at on your retirement journey, contact us here to set up your complimentary strategy session today.