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Age 66 and 67

The Full Retirement Age for Social Security depends on when you were born. For those born between 1943 and 1954 the FRA is 66. The Full Retirement Age increases by two months for each year if you were born between 1955 and 1959. And the FRA for those born in 1960 or later is 67. Once you reach the FRA your Social Security benefits will not be affected (reduced) by income earned if still working. Also spousal benefits will not increase once you reach your FRA.

Age 70

You may delay the collection of Social Security benefits until 70. Your benefit may be over 30% higher than if you started to collect at your FRA. Benefits will not increase once you reach the age of 70.

Age 70 1/2

When you reach the age of 70 1/2 you must start to take minimum distributions from your tax-deferred accounts like a 401(k) or IRA. The IRS requires that you take a Required Minimum Distribution (RMD. In general you must begin withdrawing by April 1 of the year following the year that you turn 70½. In general, your age and account value determine the amount you must withdraw. Changes in marital status, death of an account owner or a change in beneficiary age can all impact the RMD. If the primary beneficiary is a spouse more than 10 years younger the IRS Joint Life Expectancy Table is used to determine the RMD, which will generally produce lower required distributions. Penalties for failure to withdraw on time are severe. The IRS penalty is 50% of the amount not withdrawn. The RMD rules don’t apply to Roth IRAs.

You may also want to consider signing up for life insurance in your 40s or early 50s and also long term care insurance in your 50s to assure coverage and lock in lower premiums instead of waiting until your 60s.

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