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Retirement planning is just life planning for your later years. Things change for everybody, and new options and rules appear when you hit 59.5, 62, 65, 70 and 72. But that doesn’t mean you have to do what everybody else does.
When you hit 59.5 you can get access to all that IRA and Roth money that has been compounding all these years without the 10% penalty imposed by our benefactors in Washington. This age also applies to deferred variable, fixed and fixed index annuities. Keep in mind taxes will apply to annuities and non-Roth qualified retirement plans.
When you hit 62, you become eligible for Social Security. Keep in mind that this amount will be the lowest amount when compared to waiting each birthday. In fact, each year you wait your Social Security benefit compounds by 8%.
When you hit 65, you are eligible for Medicare. In fact, if you wait to long you may be penalized for late enrollment.
When you hit 70, you are eligible for your full Social Security benefit if you waited until 70. And you mind as well take it because the amount will not increase if you wait any longer.
When you achieve the ripe old age of 72, you are mandated to take Required Minimum Distributions. Remember, you have to take this minimum amount even if you don’t want or need it. The reason is that our benevolent overlords would like you to kindly pay taxes on all those deferred gains. And you’ll pay them as ordinary income tax, not as capital gains, thank you very much.
So there are some of the benefits and requirements by age. But here’s what’s not required in your retirement: your date or definition of retirement.
Lately, I’m meeting 50 and 60 year old people who either love what they do or know what they want to do in “retirement.” I know of a surgeon who will retire at the end of June. He’s 79. Over the last decade he’s slowly narrowed his practice to what he wants to do. I know quite a few free-lancers, writers and baseball empires who plan on doing “work” that they love until somebody else tells the to stop.
Conversely, I know people who are counting down the days to shuffle off the shackles of the 9 to 5 coal mine and do absolutely nothing all day. Golf, gardening and watching the grass grow. And guess what? They can do it if the financial plan allows. And they can change their mind and start business after sitting on the porch in a rocking chair for 18 months.
My point is there are a lot of rules in retirement. But the fun part is creating a life where if you work or don’t work you are happy. And then nothing feels like work and the rules feel like tools.