There's no single official retirement age, so you can really stop working whenever you
have the resources to do so. However, your age is important for qualifying for certain benefits, so
that might be when you can take money out of retirement accounts without paying penalty taxes,
or when you qualify for the best pension or the best Social Security benefit.
So, that's what we're going to talk about here. We will mostly cover Social Security
and retirement accounts and pensions, and the various ages related to those. And I want to
point out that you don't necessarily need to match your retirement age with those ages So you could
potentially retire a couple of years before you qualify for your full Social Security benefit,
and in that case, you would be withdrawing funds from savings, which can be kind of scary,
but when you begin your Social Security benefit, you can reduce the amount you're taking out,
which ideally helps your money last quite a bit longer. These are the types of things I
help clients with, and if you'd like to chat about that I'm happy to explore that with you.
Looking at Social Security, the retirement age or the full retirement age when you get
your your main benefit that they display on your benefits statements happens to go up a little bit
each year, but let's say you were born in 1960 or later. That full retirement age would be age 67,
so to get that, you wait till age 67. But you could take benefits as early as age 62.
We might call that your early claiming age or your reduced claiming age, and that's because
they reduce the amount they pay you if you claim early. So it might be as little as 70 percent
of your full retirement age benefit, but you do start getting your income sooner. On the other
hand you could wait. You can delay benefits and until age 70, they actually increase your monthly
benefit by about eight percent per year, so you could potentially get up to 124 percent of that
full retirement age benefit. So choosing when to take Social Security is extremely important
and you want to look at things like how long will you live, what assets do you have,
and other factors as you weigh the pros and cons. Your retirement accounts are also
kind of tied to your age. Traditional and Roth IRAs both have an age 59 and a half rule,
so taking withdrawals before then can potentially lead to tax penalties, like an early withdrawal
penalty, which is typically 10 percent, although it could be higher with a SIMPLE IRA
but there are ways to get around these. In some cases, you might use a 72 (t) or an SEPP,
where you start drawing down the amount you have in your account over your life expectancy or
for a certain number of years, and that can potentially help you dodge the tax penalty
Roth IRAs have an additional rule tied to them that you need to be aware of: the five-year rule.
But this might not apply if you've had money in your account forever
and your're at retirement age, so just be aware of that and check on it before you take withdrawals.
And Roth IRAs can be really flexible. So you can potentially take your contributions right back
out at any time with no taxes and no penalties. That would apply to your
regular annual contributions, not necessarily the earnings on top of them, but those regular
annual contributions of six thousand dollars, for example, might be able to come right out.
Your employer plans get quite a bit more complicated, so they might have certain ages
laid out in the plan when you qualify for vesting or something else. But one thing to be aware of is
the age 55 rule. So if you stop working for an employer at age 55 or later, you may be able to
take withdrawals from that plan without an early withdrawal penalty, so that could be helpful in
that period, that little window between age 55 and age 59 and a half. So you want to try and avoid
those penalties. Again talk with somebody who is really familiar with your details and review this
with them before you try it because it can get complicated. There's also the 457 plans which
might help you totally avoid early withdrawal penalties. Those can be quite flexible.
And public safety workers in the TSP, the Thrift Savings Plan or the government savings plan might
be able to take early withdrawals as early as age 50. So that's your firefighters, law enforcement,
EMS, etc. Like I said, this gets pretty complicated, so you want to look at all of
these things closely. I want to take this moment to point out that you know surprises can happen.
So people sometimes expect to work longer than they're actually able to, unfortunately. If we
look at this data from EBRI, the Employee Benefits Research Institute, they looked at folks who said
they're going to work until age 65 or older, and about 70 percent of people thought that was them.
But in reality, only about 30 percent of people were able to work that long, and the reasons for
leaving the workforce early are over here. Unfortunately you've got health problems and
disability, maybe changes at the company. There are a couple of good news reasons down here,
like you actually have the money to just stop working and that's great. But what we want to know
is that surprises can happen and you just want to plan for the best, hope for the best, but be able
to absorb some curve balls if those happen to come your way. Before I get into pensions and before
I forget I want to ask you to please subscribe to this channel. It doesn't cost you anything,
it does help you stay up to date on things like this, and it helps me out a tiny bit, so thanks
for doing that! And thank you to everybody who has already subscribed. Your pension plans are
also kind of complicated. Every plan is different, but you might have something for example like a
"Golden 80" and that's where your years of service plus your age add up to 80 or more. So if you're
60 years old plus 20 years of service that's 60 plus [mistake "80 plus"] 20 adds up to 80,
and you have met that requirement. Other employers are just going to have you know different levels
of benefits, and that might be age 67 plus 10 years of service puts you at a certain level.
These are things that you just need to find out with your particular employer and you know you
can have somebody like me help you figure that out, or you can call your retirement system.
They are often very eager and very helpful in getting you that information so that
you understand what to expect. And you might also be able to purchase years of service. So
if you have extra funds available, but you haven't met the years of service requirement,
you can maybe buy a couple of years and that helps you get into your retirement income earlier than
you otherwise might qualify for. So I'm going to put a link in the description to that Social
Security website. You can go directly there and get more details on that. There are some handy
calculators and I want to remind you again that there are all these different ages and it gets
pretty complicated, but you don't necessarily have to match your retirement date with those
ages if you're not ready to retire. I hope this has all been helpful, and have a good day