6 Key Stages to a Prosperous Retirement

Key Takeaways

  • Until age 50, you should be saving at least 15 percent of your income, and even more once you’re in your 50s.
  • You can start taking Social Security as early as age 62, but the longer you defer, the greater your benefits (until age 70).
  • At age 70, you’re required to start taking Social Security (and distributions from your IRA and qualified retirement plans).
  • Ages 50, 62, 65, 67 and 70 are important milestones in your financial life. Contact us today (800-480-7913 | coyle@coylefinancial.com) if you have questions or concerns.

If you’re still working, I’m sure you dream about the day you can finally retire. But the days of gold watches, a pension and Social Security at age 65 are long gone. It’s more complicated today, and I want to walk you through six important stages in reaching a prosperous retirement.

  1. Early adulthood to age 50. As a rule of thumb, you should be saving 15 percent of your income during this time period. Most companies have 401(k)s that are tax deductible and tax deferred to help you save. And when you do, consider placing more of your savings into equities rather than in fixed income because of the miracle of compounding (see my recent post about The Rule of 72).
  2. Age 50 to 59-1/2. These are typically your peak earning years. Also, after age 50, the IRS allows you to make an additional $6,000 a year in “catch-up” contributions to your retirement accounts, so take advantage of this option if you can.
  3. Age 59-1/2 to 62. Why 59-1/2? That’s the magic age at which you can start pulling money from qualified retirement accounts and IRAs without being subject to the 10 percent early withdrawal penalty.
  4. Age 62 to 65. At age 62, anyone can start taking Social Security benefits. Your benefits at this age are not as high as they would be later in your 60s, but you can certainly start taking them. If you’re still working, you probably won’t take benefits at age 62 due to a possible reduction of benefits based on your salary level. If you’re going to retire in your early 60s, certainly consider taking advantage of the program. If you can wait until age 65, even better.
  5. Age 65 to 67. At age 65, you can sign up for Medicare. Medicare dramatically reduces your health care premiums. Age 67 is considered “full retirement” age for anyone born in 1960 or later (it’s age 66 if you were born before 1954 and phases in between the years 1954 and 1959 to age 67). At that point, you have full Social Security benefits.
  6. Age 67 to 70. Now, you can take your Social Security benefits at any time without penalty, and the longer you wait up to age 70, the greater your benefits. That’s when it’s mandatory that you start taking Social Security benefits, as well as distributions from your IRAs and qualified retirement plans. 

Conclusion

Retirement planning and calculations can be confusing. Come in and see us anytime if you’d like help navigating any of these important life stages.
800-480-7913 | coyle@coylefinancial.com

Until next time, enjoy.

—Gary

www.coylefinancial.com
800-480-7913 | coyle@coylefinancial.com

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