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Health & Fitness

Your Money and the Four Birthdays That Count

Four key birthdays affect your your tax, health care and retirement benefits situation. Do you know what they are?

Birthdays may seem less important as you grow older, they don't seem as important as getting a driver's license at 16, voting at 18, drinking at 21, or getting depressed at 50. But, beginning at age 59, there are birthdays that can have a big impact on your tax situation, health care eligibility and retirement benefits.

  1. 59 1/2 - You can start taking penalty-free withdrawals from IRA's and qualified retirement plans, provided certain conditions are met. Ordinary income taxes generally apply (withdrawals prior to age 59 1/2 are subject to a 10 percent federal income tax penalty.
  2. 62 - You are eligible to start collecting Social Security benefits, although your benefit will be reduced by up to 30 percent. To receive full benefits, you must wait until "full retirement age", which ranges from 65 to 67, depending on the year you were born.
  3. 65 - You are eligible to enroll in Medicare.  Medicare Part A Hospital Insurance benefits are automatic for those eligible for Social Security.  Part B Medical Insurance benefits are voluntary and have a monthly premium ($96.40 or $110.50, depending on income and other considerations). To get coverage at the earliest possible date, you should generally enroll about 2-3 months before turning 65.
  4. 70 1/2 - You must start taking minimum distributions from most tax-deferred retirement plans or face a 50% penalty on the amount that should have been withdrawn. Annual required minimum distributions (RMD's) are calculated according to life expectancies determined by the federal government.

*Source: Medicare & You 2011, U.S. Department of Health and Human Services

Joe Arndt, CLU, ChFC, Pres. Arndt & Associates Financial Services, 8124 Big Bend Blvd. St. Louis, MO  63119.

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This information is not intended to be tax or legal advice.  Please seek tax or legal advice from an independent professional advisor.

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