King & Wood, P.A.

When Should You Start Taking Social Security Benefits?

“Should you retire now and begin collecting your benefits, or hold off for a few more years?”

You don’t need to wait until age 67 to start collecting Social Security benefits, even though the Full Retirement Age is currently 67. You could, if needed, start collecting benefits as early as age 62, although there are some downsides to such an early start, according to a recent article from CNET, “When Is the Best Time to Begin Collecting Social Security Benefits?”

When you start collecting Social Security could impact your finances for the rest of your life. While the big Cost of Living Adjustment (COLA) in 2023 added more cash to every benefit, you might want to know if this is a reason to start collecting benefits this year.

There are pros and cons, and the best solution requires an honest and thorough look at your own financial situation, including other sources of retirement income.

First, how are benefits calculated? The Social Security Administration uses your average monthly earnings from up to 35 years to calculate your “primary insurance amount” or the benefit you’d receive at FRA (Full Retirement Age). This includes income up to the “taxable maximum” amount, which is $160,200 for 2023.

After determining the number of years, the years with the highest earnings are chosen, taking inflation into account. The sum of those earnings, divided by the total number of months worked during those years leads to a final resulting average, rounded down to the next lower dollar amount.

Your earnings are then indexed, so future benefits are reflected in the current standard of living to help offset inflation. This “average indexed monthly earnings” number is then used to calculate your monthly benefit.

If you are a spouse or an ex-spouse of someone who has contributed to Social Security through taxes, you might be able to claim part of their benefits, either receiving the spousal share of their benefit or a payout based on your own work history, whichever amount is greater.

The earliest you can start taking benefits is age 62, although you’ll receive a smaller amount than if you wait until FRA. Every situation is different, so there’s no single “best age” for everyone. The questions to ask are these: when do you want to retire, and when can you afford to retire?

When you can afford to retire depends on more than the savings you have accumulated. It also depends upon the lifestyle you want and where you’ll live during retirement. You’ll also want to consider your health and longevity. If you are living with a chronic illness, you may choose to retire earlier and collect earlier. It’s a very individual decision.

If Social Security is the sole or majority income source to pay expenses during retirement, waiting to retire and claiming benefits at a later date is likely your best choice. You’ll receive more money each month and have more time to save for retirement.

If you choose to retire early, benefits will be reduced for each month before FRA. If you were, for example, born in 1960 or later and retire at age 62 with a retirement benefit of $1,000, your monthly payment will be reduced to $700—a 30% reduction.

On the other hand, that’s $700 you would otherwise not receive if you weren’t taking Social Security benefits. Therefore, you might benefit from collecting smaller payments over a longer period of time.

Retirees need to monitor their spending and withdrawal rates, so they don’t outlive assets. Reducing spending and forgoing costly expenses like travel, especially when markets are down or inflation is high, can help extend retirement savings.

Reference: CNET (Feb. 25, 2023) “When Is the Best Time to Begin Collecting Social Security Benefits?”

What Is Social Security Increase in 2023?

“The government has announced a change that may help ease the pain for those who depend on Social Security, along with two others that will affect those who are still working.”

Three big changes are coming to Social Security in 2023, and they may factor in your financial plan for the coming year. A recent article from The Motley Fool, “3 Changes to Social Security in 2023 You Probably Didn’t Know,” says checks are going to look a lot different in 2023.

Record inflation levels have made everything from gas to groceries more expensive and a serious challenge for seniors dependent upon Social Security. However, change is coming soon.

The Cost-of-Living Adjustment (COLA) for 2023 is going to be a whopping 8.7%. This adjustment happens every year, but this is one of the biggest increases in many years. In December, the Social Security Administration started sending notices to all beneficiaries listing their new monthly benefit. The new number can also be seen on the My Social Security website.

There’s also been a change to the amount you can earn and have to pay in Social Security payroll taxes. In 2022, only the first $147,000 was subject to Social Security payroll taxes. This will increase to $160,000 in 2023. If your goal is to achieve the maximum Social Security benefit upon retirement, you’ll need to both earn more and pay more taxes on at least this much.

This really only impacts high income earners. Most people who earn less than $147,000 are already paying Social Security taxes on their income. Only high-income earners will have to pay extra next year.

The third big change is to thresholds for the earnings test. The Social Security earnings test withholds money from Social Security benefits if the taxpayer is receiving benefits and earns too much before they’ve reached their full retirement age (FRA). Depending on the year of birth, this could include people between 66-67.

In 2023, you lose $1 from each check for every $2 earned over $19,560 if you’re under your FRA for the entire year. You also lose $1 for every $3 you earn over $51,960 in the year you reach FRA if you earn this much before your birthday.

These thresholds will increase in 2023, from $19,560 to $21,240 and from $51,960 to $56,520.

The money lost to the earnings test doesn’t evaporate. When the taxpayer reaches their FRA, benefits are recalculated, and future checks are larger to make up for any lost amounts.

Your buying power won’t change that much. However, the increases are hoped to relieve some of the financial pain of inflation. Budgets will still be tight for those who don’t have other sources of income. A part-time job might be needed to provide additional income. If they exist, retirement accounts will need to be tapped.

Reference: The Motley Fool (Dec. 3, 2022) “3 Changes to Social Security in 2023 You Probably Didn’t Know”’

How to Maximize Lifetime Social Security Benefits

“As retirement nears, you may be wondering when to start taking Social Security payments. These benefits are primarily based on your earnings during your working years and your age when you start receiving benefits.”

Unless you know your date of death, it’s challenging to know when to start taking Social Security benefits to maximize lifetime payments. But, as explained in an article titled “How to Calculate Your Social Security Break-Even Age” from U.S. News & World Report, you can get close.

Age 62 is when people can start taking payments, but they will be reduced compared to those taken at full retirement age. To achieve the maximum monthly benefit, wait to take benefits at age 70. The total monthly benefit will be higher if you start collecting at a later age, but it will take a while to receive the same amount if you start taking benefits earlier. The “break-even” point comes when the payments later in life begin to exceed the value of taking payments earlier.

A number of factors are at play:

• Your personal and family health history
• Your spouse’s age and benefits level
• Other income streams

Here’s one example. If your full retirement age (FRA) is 67 and your benefits will be $2,000 per month, but you decide to collect at age 62, your monthly benefit is reduced by up to 30%. You’ll receive $600 less if you start payments at age 62, and your monthly benefit will be reduced to $1,400. If you can wait until your Full Retirement Age, the monthly benefit will be $2,000. Every additional year after age 67 you don’t take benefits, your monthly benefit increases by 8%. This would give you a monthly benefit of $2,480 per month at age 70.

Taking the wider view, claiming at age 62 means a total of around $470,000 in benefits if you live to 90 (not including any COLAs, or Cost Of Living Adjustments). Claiming at Full Retirement Age would net about $595,000 by age 90. If you started claiming benefits at age 62, you’d have to reach age 80 to break even with what you would have received if you’d waited until Full Retirement Age (FRA).

But there are other things to take into consideration. Since none of us knows when we are going to die, deciding when to start taking Social Security benefits should look at other considerations. One is your life expectancy. In some families, living into the late 90s is common, while others rarely make it past 70. If you have a chronic medical condition like diabetes, a heart condition or cancer, you may want to start taking benefits earlier.

Another element is your spouse’s medical status and benefits. If the main breadwinner takes benefits early, the surviving spouse’s benefits will be reduced. When one spouse dies, the surviving spouse will receive the higher of the two benefits.

Whether you are still working is another factor to consider. Earning more than $19,560 while collecting Social Security means any benefits will be reduced. If you earn more than $19,560 in 2022 and are collecting benefits before your FRA, your benefit will be temporarily reduced by $1 for every $2 earned above the limit. When you reach FRA, then you can earn an unlimited amount with no reduction in Social Security benefits.

If there are other income streams for the household, it may make sense to use those accounts for income and hold off on Social Security. But if funds are tight and you don’t expect to live a long life, it may make more sense to file for benefits earlier, rather than later.

Reference: U.S. News & World Report (Aug. 26, 2022) “How to Calculate Your Social Security Break-Even Age”

Do You Lose Benefits If You Retire Early?

“Claiming Social Security before full retirement age (FRA) has consequences–namely, that you'll get stuck with a lower monthly benefit for life.”

Not everyone retires because they want to. A lost job, serious illness or large life change could put you into an early, unwanted, retirement. A recent article from USA Today titled “Forced to retire early? 3 things you can do to put off filing for Social Security” explores the options.

The first thing most people think of is taking Social Security benefits before Full Retirement Age (FRA), which has long-term consequences. The idea seems logical: by taking benefits, you’ll protect your retirement nest egg. However, you’ll receive a lower monthly benefit for life. Instead, consider a few alternatives.

Pursue a part-time job. If finding a full-time job doesn’t work, or if you aren’t physically or mentally able to work full time, a lower-stress part time job could fill in the financial gaps. Employers are eager to find qualified workers, in all kinds of workplaces. You might score a remote part-time job, which would be ideal if mobility is an issue. You may prefer a position where you interact with the public, like the greeter at big box stores. If you’re savvy enough to score a high paycheck, you might be able to get by on a different income level, while letting Social Security benefits grow.

Revise your spending significantly. Take a look at your cashflow. If you’re in a hot housing market, can you sell your current home and move into smaller quarters? Does your family still need two (or three) cars? If you’re among the average Americans who dine out at restaurants several times a week, a return to eating at home could help your budgeting. How many streaming services are you paying for every week?

In some instances, you can’t cut spending, especially for medical care. However, chances are there are some cuts you can make to help trim spending and reduce the withdrawals from retirement accounts, including IRAs, SEPs or 401(k)s.

Can your home create income? Monetizing your home can take a few different forms. Today’s reverse mortgages are not the same as they were thirty years ago. Depending on how much equity you have in your home, you might find the monthly checks help avoid having to take Social Security early.

Could you take in a roommate to help with monthly bills? Obviously, this step requires a lot of thought. However, if an additional $500 would tide you over, it might be a viable option—and you may enjoy the company. There are non-profit organizations that pair seniors with roommates. There are also online apps for people to rent out their fenced backyards by the hour to dog owners who need a safe place to play with their pets.

Knowing there are options can make financial stress a little less overwhelming. Do your homework and find what works for your situation.

Reference: USA Today (June 26, 2022) “Forced to retire early? 3 things you can do to put off filing for Social Security”

When a Spouse Dies, Does Survivor Get Their Social Security Benefits?

“When you’re gone, your spouse’s income will take a major hit–one that can be worsened significantly, if you make the wrong decision about when to claim.”

Most people don’t understand how Social Security works for themselves or their loved ones. Here’s one major misconception: you can’t file early for Social Security and then get an increased level of benefits once you’ve reached Full Retirement Age, or FRA. This is one of many common errors, according to a recent article “When You Claim Social Security Can Have Huge Implications for Your Spouse” from Kiplinger. Once you’ve started taking benefits before your FRA, your lower level is set for life.

Another common error happens when married couples don’t understand how their benefits impact each other. If your spouse depends on your Social Security benefits to pay the bills, you both need to gain an accurate understanding of how surviving spouse benefits work.

Let’s that say a couple retires and both decide to take their Social Security benefits right away. One is 66 and the other is 62. The older, Pat, receives $3,000 monthly. The younger spouse, Penny, will receive $1,900. Their total household benefit from Social Security is $4,900. If Pat dies first, Penny will lose her own benefit and receive only Pat’s $3,000 monthly benefit. If this is the only income, Penny may face some serious financial challenges.

If Pat started taking benefits earlier than his FRA, at 64 instead of 66, his monthly benefit would be $2,625. If he were to start taking benefits at 62, his Social Security benefit will be even smaller. The reductions are permanent, and they also impact a surviving spouse’s monthly benefit.

What can you do to maximize your spouse’s survivor benefit? Wait for as long as you can to claim your Social Security benefits. For every year you wait, you earn an extra 8% in delayed benefits. These increases grow until age 70, at which point your Social Security benefit reaches the maximum.

Not everyone can afford to delay their benefits. However, when possible, it makes a big difference to the surviving spouse, who is statistically likely to be the female spouse. For couples who can afford to delay benefits, couples with significant age differences and couples where one of the two has exceptionally good health or comes from a family with longevity, this is a worthwhile approach.

Delaying benefits means the loss of benefits during the years until age 70. Forgoing several thousand dollars a month may not be possible for everyone.

If your surviving spouse won’t be able to make ends meet without both Social Security benefits, there needs to be a plan to somehow bridge the gap. How this is done depends upon the individuals and their families. Every situation is different. It is not an easy situation to address. However, one thing is certain: ignoring it will not make the problem go away.

Reference: Kiplinger (April 20, 2022) “When You Claim Social Security Can Have Huge Implications for Your Spouse”

Why Is Social Security Important?

“Even for the wealthy, their lifetime Social Security benefits likely rank high among their largest assets. For people with average lifetime incomes, it is often the biggest.”

Knowing the ins and outs of various Social Security strategies is important to make the most of the program for you as an individual and for your family. Questions about making the right financial moves and investing are usually not followed by questions about Social Security. However, they should be. A recent article from CNBC titled “Social Security may be a ‘treasure trove’ for you and your family. But first you have to navigate some complex rules” explains how Social Security includes thirteen different kinds of benefits.

The list of different payments includes disability benefits, spousal benefits, divorced spousal benefits, child-in-care spousal benefits, widow/widower benefits, child benefits, disabled child benefits, mother/father benefits, divorced widow/widower benefits, parent benefits, grandchild benefits and death benefits.

Each type of benefit has its own requirements. The one catch: Social Security is a “use it or lose it” system. If you do not know you are eligible for a benefit, you might miss it.

One basic fact: you can wait until age 70 to get the maximum benefit. However, there is no advantage to delaying taking Social Security benefits past age 70. Eligibility begins at age 62, and for each year you collect benefits before your Full Retirement Age (FRA), you lose about 7%. FRA is based on your date of birth. Therefore, if you can wait to collect at your FRA, you will get 100% of your benefits. For every year past FRA, benefits increase by about 8%.

If you can wait from age 62 to 70, your benefits will be about 76% higher. Most people do not wait because they need the income or have serious health conditions and do not expect to live long enough to benefit from the increase.

For some families, maximizing the benefits is less about the wage earner and more about the family. If the wage earner has a disabled child, claiming benefits could trigger the child-in-care spousal benefit and a disabled child benefit. In this case, it may be better to take benefits earlier to help the entire family.

Another advantage of waiting until age 70 is it will result in a higher surviving spouse benefit, enabling a widow or widower to receive the full amount of their spouse’s monthly benefit plus their own benefits, if the surviving spouse has their own earnings.

Ex-spouses who were married for at least ten years and did not remarry until they reached age 60 are eligible for survivor benefits. You may not want to wait until FRA or age 70 on their behalf, but circumstances vary, so you should at least be aware of this.

The survivor benefit for young children or disabled children of any age, if they were disabled before age 22, does not change regardless of when you claim.

The complexity of all of these programs makes it sometimes difficult to know what the best claiming strategy is. Most people focus on the individual or couple, but not the entire family’s benefits.

Social Security experts advise wage earners to speak with more than one employee to get answers, since you may get different answers. Do your research and be your own advocate to ensure that you and your family receive the correct benefits.

Reference: CNBC (Feb. 7, 2022) “Social Security may be a ‘treasure trove’ for you and your family. But first you have to navigate some complex rules”

Should I Delay Claiming Social Security?

“When you begin claiming affects how much money you get from the program, and once you're receiving checks, it's difficult to undo your decision.”

Getting the timing right on Social Security is important. Deciding when to claim is a decision requiring thoughtful planning and accurate information. A recent article from York News-Times titled “3 Reasons to Put Off Social Security for Another Year and 2 Reasons Not to” takes a common-sense approach.

There are good reasons to delay taking Social Security benefits. First, if you are under 70, the longer you delay benefits, the larger your checks. Benefits grow anywhere from 5/12^th of a month to 2/3^rd of 1% per month, depending upon your Full Retirement Age (FRA) and your current age. FRA is the age when you qualify for a standard benefit, based on your work history. For most of today’s wage earners, this is sometime between age 66 and 67.

A second reason to delay: you may get a larger lifetime benefit, if you live into your mid-80s or beyond. However, those who need the income to pay bills may not have a choice, even if they have not reached their FRA. If possible, delaying by a few months might be helpful to increase benefits.

A third reason is if you are still working. If you are working and earning a decent salary and have not yet reached your FRA, you may run into problems with the Social Security Earnings Test. The federal government deducts $1 from each monthly benefit for every $2 you earn over $19,560 in 2022, if you will be younger than your FRA for the entire year. If you will reach your FRA in 2022, you will still have a deduction, but this will be $1 for every $3 you earn over $51,960. If you are still working, delaying taking benefits makes sense.

The good news: the money will not be out of your pocket forever. Once you reach FRA, your benefits are recalculated to include the amount previously withheld, making checks larger. However if you do not need benefits right away, the best decision is to delay taking Social Security until you retire.

There are also reasons why delaying taking Social Security benefits is not necessary. The biggest one is if you are 70 or older. The benefits stop growing on your 70^th birthday, so there is no reason to delay. Make sure to sign up for benefits by your 70^th birthday.

If your life expectancy is not great, then there is no incentive to waiting. If you pass away before signing up for benefits, you might not get any money from Social Security. Take an honest look at your own health and your family’s health history. If you think you might not live all that long, or if everyone in the family passes early, it may make sense to apply for Social Security, even before your FRA.

When you sign up for benefits matters a lot. The Social Security Administration has calculators on its website to use once you have created a my Social Security account. This will give you an idea of how much you can expect to receive in Social Security benefits at various ages, based on your own work history.

It also makes sense to align your estate plan and retirement plans with Social Security.

Reference: York News-Times (Jan. 27, 2022) “3 Reasons to Put Off Social Security for Another Year and 2 Reasons Not to,”

What Should I Know Before Starting Social Security?

“Since you began working, Social Security has recorded your reported earnings under your name and Social Security number. Social Security updates your record each time your employer (or you, if you're self-employed) report your earnings. Your earnings determine your benefit amount.”

It’s not necessary to become an expert on Social Security before starting to take benefits. However, having a good understanding of how things work could make a difference in your household income, explains a recent article from USA Today titled “Explaining Social Security: TLDR edition: The 8 things you should learn about your benefits.” Simply put, if your earnings are wrong, you may get less money than you’re entitled to.

Start by checking your earnings records. In the past, Americans received a yearly paper statement of records and benefits. Today, you’ll need to create a “my Social Security” account to review your earnings and benefits information. It’s easy enough to do, so don’t delay.

There’s no time limit on correcting earnings errors. The information can be found in earnings records, which can be seen in tax returns or W-2 forms. The exception to this is self-employed earners, and their limit is tight. They have exactly three years, three months and 15 days to correct any earnings reports.

Routinely checking benefit amounts is smart for planning household cash flow in retirement. Today’s statements provide estimates of monthly benefits every year from age 62 to 70, including full retirement age.

A critical data point for Social Security benefits: your full retirement age, or FRA. This is the age when you can receive your full benefit retirement amount, determined by the year you were born. All of this information is all on the Social Security website.

You don’t have to wait to reach FRA to start collecting benefits. You can file for benefits anytime between age 62 and 70, but if you decide to start taking benefits before FRA, the monthly amount is reduced permanently. On the other hand, if you delay benefits until after FRA, you are eligible for delayed retirement credits and may see an increase in your monthly benefit. The choice is yours, but it’s better to make an informed decision that best suits your needs.

Social Security benefits were never intended as a sole source of retirement income. The goal is to replace about half of a low earner’s pre-retirement salary, about 40% of an average earner’s pre-retirement salary and about a third of a high earner’s pre-retirement salary.

Benefits are calculated on the monthly average of the top 35 highest earning years. It’s really that simple. If you haven’t worked for 35 years, zeros are used for those non-working years, which lowers the monthly average and by extension, the monthly benefit.

There is an option to start collecting before FRA called the voluntary payment suspension. If you’ve started taking benefits before FRA, you can voluntarily request to suspend retirement benefits at your FRA and wait to receive benefits at a higher amount. This request can be made as many times as you wish between FRA and age 70. Be aware that if you suspend your own benefit, anyone who receives a benefit on your work record will have their benefits suspended as well, except for divorced spouses.

If spouses have different income levels, it often makes sense for the higher earner to wait to collect until age 70. However, if the higher earner dies after starting benefits at age 70, the surviving spouse will receive the deceased’s age 70 benefit.

Reference: USA Today (Nov. 5, 2021) “Explaining Social Security: TLDR edition: The 8 things you should learn about your benefits”

 

What Happens to Social Security Payments after a Person Dies?

“The Social Security Administration should be notified as soon as possible after a beneficiary dies. Depending on your relationship to the deceased, you may be entitled to benefits for survivors.”

How does the federal government know to stop sending Social Security payments when a recipient has died? What if the surviving spouse or a dependent doesn’t know they are entitled to benefits after a loved one has died?

Tackling this issue when an older person or spouse has died can be complicated, but a helpful article from CNBC titled “Here’s what happens to Social Security payments when you die” provides important answers.

The Social Security Administration needs to be notified of the death of a benefit recipient as soon as possible. In some cases, funeral homes have a notification process, and they report the death. The person who has been named as the deceased’s executor can also call Social Security.

Whoever calls or contacts the Social Security Administration will need to know the decedent’s Social Security number.

The last month a person is eligible for Social Security benefits is the month prior to their death. Any benefit paid after the month of their death must be refunded. That’s because each payment received represents the previous month’s benefits. If a person dies in August—even if they die on August 31—July is the last month they were eligible for benefits.

If benefits are made by direct deposit, the bank needs to be notified, so it can return the benefit. Using those funds after a recipient has died is a federal crime, even if the death is not reported. If the SSA receives notice of this occurring, the agency may initiate a criminal investigation. The SSA and other government agencies coordinate their records to identify any unreported deaths.

Anyone already receiving money based on the deceased’s record will automatically convert to survivor benefits, once the SSA receives notice of the death. However, in other cases, the surviving spouse should contact SSA to apply for survivors’ benefits. This must be done by appointment in person at a local office, since it cannot be done online.

If the surviving spouse has reached full retirement age, they can get their deceased spouse’s full benefit. They can apply for reduced benefits as early as age 60 or age 50, if they are disabled. If the survivor qualifies for Social Security on their own earnings record, they can switch to their own benefit anytime between ages 62 and 70, if the benefit amount would be greater.

There is usually a one-time lump-sum death payment of $255 given to a surviving spouse or qualified child.

Reference: CNBC (Aug. 16, 2021) “Here’s what happens to Social Security payments when you die”

 

Key Dates for Planning Retirement

“Each type of retirement benefit has a different eligibility age. Your age plays a big role in how much you can expect to receive from Social Security and what you need to do to avoid retirement account penalties.”

Just as there are many types of retirement benefits, there are many dates to keep in mind when creating a retirement plan. Some concern when you can make larger contributions to retirement accounts and others have to do with withdrawals. Knowing the dates for each matters to your retirement planning, according to the recent article title “10 Important Ages for Retirement Planning” from U.S. News & World Report.

When should you max out retirement savings contributions? The sooner you start saving for retirement, the more likely you’ll retire with robust tax-deferred accounts. Tax breaks and employer matches add up, as do compounding interest returns. The 401(k) contribution limit in 2021 is $19,500. Wage earners can deposit up to $6,000 in a traditional IRA or Roth IRA. If you’re in your peak earning years, traditional IRAs and 401(k)s may be better, since your tax bracket is likely higher to be higher than when you started out.

Catch-up contributions begin at age 50. Once you’ve turned 50, you can make catch up contributions to 401(k)s—up to $6,500—and up to $7,000 in traditional IRAs. That’s for 2021. If you’re able to take advantage of these contributions, you can put away additional money and qualify for even bigger tax deductions.

401(k) withdrawals could start at 55. If you left your job in the same year you hit the double nickel, you can take 401(k) withdrawals penalty-free from the account associated with your most recent job. The “Rule of 55” lets you avoid a 10% early penalty, but you’ll still have to pay income taxes on any withdrawals from a 401(k) account. However, if you roll a 401(k) account balance into an IRA, you’ll need to wait until age 59½ to take IRA withdrawals without any penalties.

When does the IRA retirement age begin? The magic number is 59½. However, traditional IRA distributions are not required until age 72. All traditional IRA withdrawals are also taxable.

Social Security eligibility begins at age 62. The earlier you start collecting Social Security, the smaller your monthly benefit. Your full retirement age depends upon your date of birth, when the benefit amount will be higher than at age 62. If you work after signing up for Social Security, your benefits could be temporarily withheld if your salary is higher than the annual earnings limit. If you retire before your full retirement age and earn more than $18,960 per year, for every $2 above this amount, your benefits will be reduced by $1. Benefits will be recalculated once you reach full retirement age.

Medicare eligibility begins at age 65. Enrollment in Medicare may take place during a seven-month period that begins three months before the month you turn 65. Signing up on time matters, because Medicare Part B premiums increase by 10% for every 12-month period you were eligible for benefits but failed to enroll. Are you delaying enrollment because you or your spouse is still covered by a group health plan at work? Make sure to sign up within eight months of leaving your job or health plan and avoid the penalty.

Social Security Full Retirement Age is 66 for most Baby Boomers. 67 is the full retirement age for workers born in 1960 or later. Millennials and younger generations qualify after age 67.

If you can wait until 70, you’ll max out on Social Security. Social Security benefits increase by 8% for each year you wait to start payments between Full Retirement Age and age 70. After age 70, the number remains the same.

RMDs begin for 401(k) and IRA retirement accounts at age 72. These mistakes here are expensive! Your first distribution must be taken by April 1 of the year you turn 72. After that, annual withdrawals from 401(k)s and traditional IRAs must be taken by December 31 of each year. Missing a required distribution and you’ll get hit with a nasty 50% of the amount that you should have withdrawn.

Reference: U.S. News & World Report (July 28, 2021) “10 Important Ages for Retirement Planning”