According to a 2014 article in the Washington Post, approximately 10,000 Americans retire every day a trend that is expected to continue for the next decade! Many hope that retirement provides the freedom to try out new opportunities, professions and travel – not to mention to get some well-deserved rest. Planning for retirement and being fiscally responsible go hand in hand. That is not an easy task – in today’s volatile economy saving is not easy and although there are a variety of new alternatives to traditional retirement investing — such as a precious metals IRA or using a self-directed IRA to purchase real estate — understanding how your 401K or IRA works and at what age you can withdraw funds from your retirement accounts is important no matter how you plan to invest. Most plans have limits on what age you can draw from your retirement funds without being taxed.
FINRA (Financial Industry Regulatory Authority) recently published some useful guidelines regarding the age milestones for your most important retirement responsibilities:
Age 50 – FINRA says that at age 50 – usually a decade or so before people retire – is a good time to expand on your retirement savings and do what is called “catch-up” contributions – especially if you are behind in your savings. FINRA reports, “For traditional and Roth IRAs, IRS contribution limits for 2017 allow you to put away an additional $1,000. If you have a 401(k), 403(b) or 457 plan that catch-up amount jumps to an additional $6,000.”
Age 55 – FINRA says this is when you may withdraw from your retirement accounts without penalty (especially if you were laid off from your job) as well as receive benefits from some company-sponsored retirement plans (check on this since each plan has different requirements).
Age 59 ½ — This is usually the age when you can start withdrawing from your retirement plans (401K, IRAs and annuities) without having a 10% tax penalty levied against you.
Age 60 – You can start to receive social security benefits if you have lost a spouse. FINRA suggests waiting as long as possible to withdraw from social security.
Age 65 – This is the age when you can receive full retirement benefits and pensions from most employers. This was the age when people can get their social security benefits – but not anymore. For people born after 1937, FINRA warns that “…your eligibility depends on the year of your birth.”
Ages 70 and 70 ½ – By age 70 you should be able to receive all of your social security benefits. FINRA says that by 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.” If you have employer-sponsored retirement plans such as 401Ks, you must start taking from those accounts as well.