Workers put a lot of time and effort into retirement planning, but missing a few important dates could derail all that work. Here are the most important deadlines.
A lot of planning goes into your retirement in the decades leading up to it, and the last thing you want is for something you could have prevented derailing that hard work.
In addition to all of your saving and investing, there are some very important deadlines to keep an eye on. There are a lot of rules when it comes to collecting Social Security and Medicare and qualifying for tax perks, so U.S. News & World Report compiled the deadlines retirees need to meet. Missing these deadlines might mean facing higher taxes, penalties and fees.
There are 12 important deadlines, starting from as young as age 50, according to U.S. News.
Congratulations! You’ve reached the point in your life when you can save some extra money in 401(k)s and IRAs. In 2013, workers can contribute an additional $5,500 in 401(k) plans and an extra $1,000 in IRAs.
At this point, if you retire early, quit or are laid off, you can withdraw from the 401(k) account at the job you most recently left without getting hit with the 10% early withdrawal penalty. IRAs are still subject to a penalty.
Now you can take retirement account distributions without paying the 10% withdrawal penalty. However, you will have to pay income tax.
Social Security payments first become available to you, but they are reduced by as much as 30%. If you are still working, part of all of the payments could be withheld.
Here’s where inaction can really start to hurt.
You are now eligible for Medicare and can even sign up three months before your birthday if you want coverage to begin the month you turn 65. You have a seven-month window to sign up, after which you could face a penalty, a Medicare policy analyst told U.S. News. Every 12 months you don’t sign up, the monthly Part B premium will increase by 10%.
Most Baby Boomers become eligible for full Social Security payments at this age. Now that you’ve reached full retirement age, you can continue working and collect Social Security payments without facing a penalty.
This is full retirement age for anyone born in 1960 or later. For this group, if they sign up for Social Security a year early at age 66, they will get 6.7% smaller payments.