Broker Check

5 Important Times in the Life of a Soon-To-Be Retiree

April 12, 2018

5 Important Times in the Life of a Soon-To-Be Retiree


59 ½

Why is 59 ½ so important? Six months before celebrating the big “60,” you can begin to withdrawal from your retirementaccountswithout an early withdrawal penalty. If you withdraw from these accounts before this time, the penalties may be substantial. Federal income taxes will still affect withdrawals from any tax-deferred accounts.



Early retirement benefits can be a great thing. At age 62, you become eligible to receive Social Security benefits at a reduced rate. You will, however, receive less benefits in the coming years if you claim social security early as opposed to waiting until you are eligible for full social security. According to the Social Security Administration (2018), “if you turn age 62 in 2018, your benefit would be about 26.7 % lower than it would be at your full retirement age of 66 and 4 months.” (pg. 4)



At this birthday, you become eligible to enroll in Medicare. The 7-month enrollment period actually begins 3 months prior to this birthday, so start planning early. The exception to this rule is for those of you who have insurance sponsored by your employer. In this case, you do have the ability to wait until that coverage ends, however, it is recommended that you sign up for Medicare at 65 even if you are not planning on retiring just yet. It is also prudent to mention here that 65 is a big milestone for Medigap as well, if you are considering purchasing Medicare supplemental insurance.



You can claim full Social Security benefits at the full retirement age at 66/67 (depending on your birth year), however, 70 is the last year your benefits will increase based on deferment. If you can wait it out, the Social Security Administration (2018) tells us that, “your benefit will increase a certain percentage from the time you reach full retirement age, until you start receiving benefits, or until you reach age 70. … (depending on age) we’ll add 8 percent to your benefit for each full year you delay receiving Social Security benefits beyond your full retirement age.” (pg. 5)


70 ½

At this half-birthday, tax deferrals on traditional IRAs and 401(k)s run out. Required Minimum Distributions (RMDs) are specific amounts that you must withdrawal every year starting 6 months after your 70th birthday, to begin your tax payments on the money in those accounts. You have one full year beginning at this half birthday to take your first RMD. For example, if you turn 70 ½ in April 2018, you will technically have until May 1, 2019 to take your first RMD. These RMDs must be taken out by December 31st of each following year or a 50% penalty will be applied on the amount that you should have withdrawn. It is important to keep in mind that December is an extremely busy month for financial institutions, therefore, the earlier you take out these RMDs, the less you have to worry about that 50% penalty.







Statistics brought to you by:

Social Security Administration | Publication No. 05-10035

ICN 457500 | Unit of Issue — HD (one hundred)

January 2018 (Recycle prior editions)

Retirement Benefits

Produced and published at U.S. taxpayer expense



Distributed by Susan Sommer at Sommer Investments
1395 Triad Center Drive, Suite 4 • Saint Peters, MO 63376
Securities offered through Securities America, Inc., Member FINRA/SIPC.  Advisory Services offered through BEAM Asset Management, LLC. Susan Sommer, CFS, CFP® Representative. Securities America, Inc., BEAM Asset Management LLC and Sommer Investments, L.L.C. are separate entities.