We typically don’t think of the word “aging” as having a positive connotation. It may bring to mind graying hairs, aching backs, and slowing down. But these things don’t always have to be true, and they don’t necessarily tell the whole story when it comes to getting older. In fact, in most cultures older people are well respected and seen as wise from having had so many life experiences. In Korea, the “hwan-gap” or 60th birthday garners a special celebration. 10 years later there is another special celebration for someone’s 70th birthday, known as “kohCui,” which means “old and rare.” If other cultures recognize that age can have its benefits, why shouldn’t we? For Americans approaching or in retirement who’ve saved for decades in a 401(k) or IRA, here are three significant ages that can have benefits: 55, 59 ½, and 70 ½.
After your retirement savings have aged like a fine wine, so to speak, you can start withdrawing from your retirement accounts without incurring the 10% early withdrawal penalty depending on your age. Typically, you must wait until age 59 ½ to do this, but you may be able to withdraw from a 401(k) at age 55. If you leave your job for any reason during or after the year you turn age 55, you can withdraw from your current 401(k) without penalty. This rule applies only to the 401(k) sponsored by the employer you leave when you’re 55 or older, not 401(k)s from previous employers.
Once you turn 59 ½, you can withdraw from your IRA and old 401(k)s without penalty. This can open up a whole range of options for your money as you near and enter retirement. We can look at many different investment options, and help you create an investment plan for your nest egg tailored to your income needs and risk tolerance. Keep in mind that whatever you withdraw from a traditional 401(k) or IRA will be taxed as income.
At age 70 ½ you will most likely be required to start withdrawing from your traditional retirement accounts.<sup If you’re not sure how much your tax burden will decrease in retirement and are worried about how much the IRS would require you to withdraw each year after you turn 70 ½, then you can have a conversation with your trusted financial professional to create a plan. Having a long-term plan in place could potentially prevent you from having to withdraw more money than you want from your IRA and increasing your tax burden in retirement. Rather than wait until are 70 ½ to decide what to do with the funds, you can explore options ahead of time.
At Moore’s Wealth Management, we can help celebrate all of these important ages with you. Age can have its benefits, and we can help you make the most of them. If part of your nest egg is invested in a 401(k) or IRA, you have a lot to think about in your 50’s and 60’s. You can sign up for a complimentary financial review so we can start to help you develop a plan to help turn your savings into retirement income.
Advisory services offered through Moore’s Wealth Advisory, A Member of Advisory Services Network, LLC. Insurance products and services offered through Moore’s Wealth Management. Advisory Services Network, LLC and Moore’s Wealth Management are not affiliated. The tax information contained herein is general and is not exhaustive by nature. Federal and state laws are complex and constantly changing. You should always consult your own legal or tax professional for information concerning your individual situation.