Nothing But a Number? Legally, Your Age Means a Lot More
SUDOKU
With my August birthday approaching, I’ve been thinking about some of the milestones in our lives. I’m not receiving offers to join AARP yet, but I know they’re not as far off as I wish. I remember when my husband, Robert, started receiving offers in the mail. He would complain about how old they made him feel. So, imagine my embarrassment when he not only joined the organization but also started wearing their fanny pack in public! That’s also the age most start getting those “free dinner” offers to great local restaurants like Baxter’s, Rob Dob’s, Biaggi’s, and Jim’s Steakhouse. Those offers remind me a lot of attending a timeshare pitch in exchange for a “freebie” resort stay or event tickets. I’ve met so many people who accidentally got strong-armed into an investment at one of them. Diner beware! (Full Disclosure: they aren’t all bad, but I’ve heard my share of stories.) My upcoming birthday is unlikely to trigger free tote bags or steak dinner offers, but yours might be a milestone, even if you don’t realize it. Your age matters — at least, financially speaking. Here’s how. When you turn 50, you can begin making catch-up contributions to your IRAs and 401(k)s. Currently, those over 50 can annually contribute an additional $6,500 to their 401(k) and $1,000 more to their IRAs than when they were 49. Taking advantage of this ability gets you the benefits of both saving and deferred taxes. *Income limitations do apply for IRAs. It might take a little math to figure out when your half birthday is, but at 59-1/2 you become eligible to start withdrawing from your retirement accounts without incurring a 10% penalty. Just remember that this choice isn’t wise for everyone. Similarly, you become eligible to receive Social Security at 62, but taking advantage will result in lower benefits. When turning 66 or 67 (depending on when you were born), you reach retirement age and can receive your full benefit. If you wait even longer, you can enjoy the maximum benefit at age 70. And don’t forget about your tax-deferred retirement accounts; by law, you need to start withdrawing from them by age 72 if you were born after 7/1/1949, or you’ll incur penalties. If any of these birthdays are on the horizon for you, we would love the opportunity to answer any questions you may have about how your age will affect your financial plan. Simply put, it isn’t as simple as delaying Social Security to receive a higher benefit. Depending on your unique situation, that strategy can cost you big! And that is just one strategy. Give our office a call so we can help you understand how to make the most of your wealth and future.
SOLUTION ON PG. 4
–Krista McBeath
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