Retirement Planning
Retirement planning is the accumulation of capital for retirement on a tax preferential basis through employer sponsored plans and individual retirement accounts. Retirement planning also includes planning for the distribution of assets from the tax qualified plans in a tax efficient manner. Triggering events that lead to distributions from employer sponsored plans are normally retirement, termination of employment , death or disability.
Assest and income for retirement normally come from three sources. 1) Social Security; 2) Employer sponsored plans; 3) Individual retirement accounts.
Retirement ages vary depending on circumstances. Some ages to keep in mind are:
59.5: The age at which you can take distributions from qualified plans without incurring a 10% premature withdrawal penalty tax.
62: The age at which you can begin to draw social security. Your benefit amount will be reduced because you are withdrawing prior to the date you are eligible for full social security.
65: The age at which you are eligible for Medicare.
70.5: The age by which you must start taking minimum required distributions from tax qualified plans.
Full Social Security Age depends on you date of birth. Generally, if you were born prior to 1938 you are eligible for full social security at age 65. If you were born after 1964 you are eligible at age 67. There is a sliding scale between 65 and 67 if you were born between 1938 and 1964. Your full social security age is reflected on the annual statement you receive from the Social Security Administration.
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