Who doesn’t love a good game? Any sports fan out there knows that most of the hard work gets done before game day. Practice, planning and precise execution are all the necessary ingredients to an athletes success.

Retirement is the same way.

You need to practice now by making your livable income lower.   Keep a close eye on cash flow and debt levels to establish the needed discipline to survive in retirement. Consider  how much income you may need each year to fund the lifestyle you want. To help maintain your living standard, you  need to save enough money to supplement other sources of retirement income. Sometimes your  pension and Social Security just isn’t enough. It is also important to be aware of how your age factors into your retirement decisions.

Here are some important ages to consider:

Age 55

For many, this is too early to retire. You  can possibly live for another thirty to forty years!However, if you take an early retirement,you can generally withdraw money from 401(k), 403(b), and profit-sharing plans without being subject to a 10% Federal income tax penalty, as long as you follow the rules.

As specified in IRS Publication 575, the following apply: you must reach age 55 by December 31 of the year you leave the workforce; money must be distributed to you from your employer’s plan and cannot be transferred to an Individual Retirement Account (IRA); early withdrawals are subject to the plan’s provisions; and only money from your last employer’s plan qualifies (not funds from previous employers). You may take early distributions from a traditional IRA without penalty, provided you receive “substantially equal periodic payments.” Since certain rules govern this provision, be sure to consult a qualified tax professional.

Age 59½

Choosing this retirement age, gives you a few more options. Generally, you can withdraw money from traditional IRAs and qualified retirement plans after the age of 59½ without being subject to the 10% tax penalty, if plan-specific qualifications are met. Ordinary income tax is due if your contributions were tax deductible. No income tax or penalty applies to distributions from a Roth IRA, provided you have reached age 59½ and have owned the account for at least five tax years.

Age 60

Even though it’s only six months later, even more doors open up at this age. Widows and widowers may be eligible for Social Security benefits. For the most up-to-date information, visit the Social Security Administration’s website at www.ssa.gov.

Age 62

Some companies may allow retirement at 62 with full pension plan benefits. This is also the earliest age for receiving regular Social Security benefits, but the benefit amount is permanently lower than its potential maximum.

Ages 62–64

This is when you will actually begin to envision what retired life could be like. For those who are working and collecting Social Security benefits while younger than full retirement age—the age at which an individual is eligible to receive full Social Security benefits—the earnings threshold is $15,480 for 2014. One dollar in benefits is withheld (a “give back”) for every $2 earned above that amount. A portion of benefits may also be taxed as income based on a complex formula that includes wages and tax-exempt income.

Age 65

This is the age many views the ideal time to retire, however you should never blindly embrace tradition. Only you truly know if you are ready to retire. Many company pension plans provide full benefits at this age. However, the age may vary by the company plan. Medicare eligibility also generally begins at age 65.

Ages 65–67

(or the year in which full retirement age is attained). Traditionally, full retirement age was 65. However, for those born between 1938 and 1959, full retirement age has been rising incrementally, and for those born in 1960 or later, the age for receiving full benefits is 67. The lower earnings threshold amount still applies for years prior to full retirement age, and a second earnings threshold rule applies for the year in which full retirement age is attained.

For those who are working and receiving Social Security benefits, there is a benefit give-back in 2014 of $1 for every $3 over $41,400 earned in the months prior to attaining full retirement. Once full retirement age is attained, the earnings threshold no longer applies, and a portion of benefits may be taxed as income based on a complex formula that includes wages and tax-exempt income.

Age 70½

If individuals in your family live into the hundreds you may want to wait till your seventies to retire. Required minimum distributions (RMDs) from qualified retirement plans, such as a 401(k) or IRA, must generally begin by April 1 of the calendar year following the year in which you reach age 70½. Roth IRAs, however, are not subject to the age 70½ mandatory distribution rules. It’s important however not to push yourself into a health crisis. There’s more to life than work, after all.

Remember perfect practice makes perfect sense. Developing financial discipline and planning your retirement age will give you the momentum to succeed at establishing the type of retirement you want to live. You have worked many decades to accumulate assets to prepare for enjoyable “golden years.”

The end.

Be sure to consult with qualified tax and financial planner to help you stay on the track to achieving your retirement goals.

As always, you can consult with me to discuss your social security decisions.

Look for future posts on the best ways to maximize your IRA’s and check out my recent post on estate planning. 

Thanks for stopping by and I hope you achieve financial success!