Tom and Easan talk about Age Milestones on the Road to Retirement
Transcript:
Katie Nealis:
So we have another question in here from Lorraine, asking, Are there any particular age milestones I should be thinking about, like age 50, 60, etc, when planning my retirement?
Tom Vaughan:
Well, in terms of planning, retirement, you know, one blanket question, you know, suggestion would just be, you know, as soon as possible as that no matter what age you are, you know, having a good solid financial plan for retirement, it isn’t as hard as you think, actually, you know, he says, helps me with those, you know, some emails going back and forth, we get the plan together. And then you know, every six months, we just take a look at that. And so that, that that’s, that’s a generic concept of starting that as soon as possible, because that will definitely help you reach some of your retirement goals, in terms of like benchmark ages.
You know, ironically, most of the people save a vast majority of their retirement assets starting in their 50s. You think maybe, you know, we should all be starting sooner, but it is difficult to start sooner, you know, we don’t have a job originally. And then we finally get a job. And we got all these things, you know, trying to get an apartment, and then we get married, we have kids get house. And so I think a lot of the reason that 50s and beyond is the one of the big you know, benchmarks for saving for retirement is because that’s when you know, things kind of settled down, the kids are out of college, or what have you got some extra money to save towards retirement.
But age 62 is when you can first take social security at age 65 is when Medicare starts. So that’s actually a really big age to understand. Because if you retire before 65, you’re going to have to cover your own insurance, what we call private insurance, or Cobra or whatever it is, can be quite expensive. So it’s something if you retire at 60, you’re going to have to cover your own insurance for five years, and then you’ll get qualified for Medicare, I’m sorry for Medicare and the supplements, and it’s a lot less expensive than the private insurance.
And then of course, age 70 is the last age that you can take Social Security. So you don’t want to go past age 70 with your Social Security if you’re waiting. So that’s another, you know, kind of benchmark age as far as that goes. But it’s Yeah, those are good things to kind of understand what you’re looking at. A lot of people feel like they’re way, way behind. I hear that all the time and meet with a 30 year old who has $150,000 saved for retirement and they feel like they’re very far behind. But statistically, across the nation, they’re not. So it’s never too late to start. That’s for sure.
Easan Arulanantham:
So going off of that, what about age 72? Is there any kind of a special thing with that?
Tom Vaughan:
Yeah, that’s when you start to have to take money out of your IRAs, your 401, K’s, your four, three B’s, all of these retirement plans. They’ve allowed you to defer taxes on all of those plans and defer taxes on any growth you’ve made in those plans. And what they’re doing is they’re putting you on a schedule at age 72 to start taking money out of those plans. That becomes taxable income, again, ordinary income to you and not capital gains. And it continues to be a higher and higher percentage that you have to withdraw the older you get. And so that is a big piece of tax planning and retirement planning that we deal with is that required minimum distribution that starts at age 72.