Aging investors face eight milestone decisions dictated by Social Security, Medicare and the IRS, that will likely impact their retirement savings and investment portfolio. Take steps now to prepare.

OctNov2016 - prepareforretirement_image1Age 50: IRS rules for 2016 allow those 50 and older to increase their retirement savings by investing an additional $1,000 per year (for a maximum of $6,500) in each IRA, and another $6,000 per year (to a maximum of $24,000) in a workplace retirement plan such as a 401(k).

Age 55: If you retire in the year you turn 55 or later, this is your first opportunity to take penalty-free withdrawals (income taxes still apply) from employer-based qualified retirement plans. While tapping into your retirement income may make sense for you, before taking action, consider the impact early withdrawals will have in later years.

OctNov2016 - prepareforretirement_image2Age 59½: You may begin to take penalty-free distributions from IRAs and potentially from qualified work plans (check with human resources to see what rules apply to you). Again, early withdrawals from your nest egg put your long-term financial stability at risk. Taxes are due on distributions attributable to pre-tax contributions and earnings.

Age 62: You may start receiving Social Security (SSA) benefits, or wait until a later age and receive a larger benefit. If you begin benefits at age 62 and are still employed, your SSA check may be reduced until you reach full retirement age (defined below).

OctNov2016 - prepareforretirement_image3Age 65: You qualify for Medicare coverage. You’ll automatically be enrolled in Medicare Parts A and B if you’re receiving Social Security at this time. Otherwise, you need to apply for Medicare during the three months before or after your 65th birthday month. Medicare is complex, so take time to learn all your options.

Age 66–67: Depending on your birth year, Social Security “full retirement age” is 66 or 67. Visit to learn which age applies to you. If you waited until now to receive Social Security benefits, you’ll have more ways to structure your benefits. Married couples have many options, so be sure to coordinate your decisions with your spouse.

OctNov2016 - prepareforretirement_image4Age 70: If you haven’t claimed Social Security yet, there is no advantage to waiting beyond age 70. You may consider donating your benefit amount if you have other investments that cover your expenses.

Age 70½: By April 1 of the year after you turn 70½, you must take a Required Minimum Distribution (RMD) from your traditional IRA accounts and workplace retirement plans. Instructions for calculating your RMDs can be found in IRS Publication 590 at Distributions must be taken from every account subject to this rule, or penalties (50 percent of the amount of the RMD) will be incurred.

To make these milestone decisions with confidence, consider hiring a financial advisor to look over your current financial position and retirement goals and help you navigate the best route.

There’s never a better time than now.


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Michael W. K. Yee, CFP®, CFS®, CLTC, CRPC®, is a Financial Advisor, Certified Financial Planner ™ practitioner with Ameriprise Financial Services Inc. in Honolulu, Hawai‘i, with Na Ho‘okele Financial Advisory Team, a financial advisory practice of Ameriprise Financial Services Inc. He offers fee-based financial planning and asset management strategies and has been in practice for 29 years.Investment advisory products and services are made available through Ameriprise Financial Services Inc., a registered investment adviser. Ameriprise Financial Services Inc. Member FINRA and SIPC
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