When was the last time you heard someone say they were 50 ½ years old?
I love the raw passion for life in kids when they tell me their age and include halves or three quarters. But most children stop saying “and-a-half” somewhere around age 12. And when we get to be adults many of us lose the excitement of getting older so we don’t like to announce our age, never mind brag that we are closer to our next birthday by adding fractions.
The loss of this childlike spirit is sad and is part of a deeper problem that relates to our society’s addiction to a youthful appearance and a fear of death. Let’s look at some very practical benefits of getting older and how the value of “and-a-half” birthdays starts making a comeback.
Starting at age 50, several birthdays and “half-birthdays” are critical to understand because they can have a significant effect on your financial well-being.
When you reach age 50 it is time to celebrate because the government gives you your first present.
People in certain qualified retirement plans are able to begin making annual catch-up contributions in addition to their normal contributions. Those who participate in 401(k), 403(b), and 457 plans can contribute an additional $5,500 per year in 2014. Those who participate in Simple IRA or Simple 401(k) plans can make a catch-up contribution of up to $2,500 in 2014. And those who participate in traditional IRAs can set aside an additional $1,000 a year.
With life expectancy expanding each year, 50 is no longer old! And it is never too late to save for retirement. Take advantage of this gift from the government and stash away as much as you can.
People are able to start making withdrawals from qualified retirement plans without incurring a 10% federal income-tax penalty. This applies to people who have contributed to IRAs and employer-sponsored plans, such as 401(k), 403(b) plans. Keep in mind that distributions from traditional IRAs, 401(k) plans, and other employer-sponsored retirement plans are taxed as ordinary income.
Because 59½ marks a time when you can begin to withdraw your qualified money out without a penalty, it is also a time to start seriously thinking about how long you have to work and how long your money is going to last in retirement. The way you manage and invest your money after age 50 may not be the same as when you are in the accumulation or savings time in your life.
So get yourself a check up and don’t delay. Demand that any financial advisor can demonstrate his/her training, skills, and experience in handling clients during the retirement income years. Just because someone advises on investing during your working and saving years does not automatically qualify him or her to help you during your retirement years. Make sure you use a retirement income specialist for your retirement income years.
At age 62 workers are able to draw Social Security retirement benefits. However, if a person continues to work, those benefits can be reduced. The Social Security Administration will deduct $1 in benefits for each $2 an individual earns above an annual limit. In 2014, the income limit is $15,480 (up from $15,120 in 2013).
Between ages 65 and 67, individuals become eligible to receive 100% of their Social Security benefit. The age varies, depending on birth year. Individuals born in 1955, for example, become eligible to receive 100% of their benefits when they reach age 66 years and 2 months. Those born in 1960 or later need to reach age 67 before they’ll become eligible to receive full benefits.
So before you make a decision, do your homework.
At age 65, individuals can qualify for Medicare. The Social Security Administration recommends applying three months before reaching age 65. It’s important to note that if you are already receiving Social Security benefits, you will automatically be enrolled in Medicare Part A (hospitalization) and Part B (medical insurance) without an additional application.
So if you have saved well and have money left in your retirement plans; this is the date that the government shows up to your doorstep and puts out their hand to get back some of that money they let you keep.
At age 70½, participants must begin taking required minimum distributions (RMDs) from traditional IRAs and qualified retirement plans, such as 401(k), 403(b), and 457 plans. RMDs are based on your account balance and life expectancy.
Being Conscious of Where You Are in Life
Understanding key birthdays may help you better prepare for certain retirement income and benefits. Perhaps more importantly, knowing key birthdays can help you avoid penalties that may be imposed if you miss the date.
So start bragging about your age and all these great things that can happen to you after 50 by announcing your age in “and a half’s”. Go tell someone your age and add the half. Watch the reaction and yours as well. Live to your fullest. Have fun. Stop feeling and acting so old. Instead, start feeling blessed to have made it to this point and revive some of that child in you.
And get good, sound advice from qualified professionals for your financial life. Remember when you used to fall and skin your knees and bounce right back up after a few tears before playing again? Well you don’t bounce back up like you used to and your investments may not have the luxury of time like they did when you were younger. If you were smart enough to stay invested after the market correction of 2008, it may have taken you until last year to just get even again. David Whyte, a great contemporary poet and really cool authentic spiritual leader, says, “to know what season of life you are in is one of the wisest and most important things you can do.” Invest wisely for your season. Be aware of the important birthdays. Be an awakened financial warrior. Control your money so it does not control you.
Connecticut resident Lawrence Ford was dubbed the “Shaman of Wall Street” by the Washington Post – he lives in “both worlds”, the modern world of business and the ancient world of wisdom. He is a speaker, writer, and shaman, in addition to being a financial advisor of Conscious Capital and a Registered Representative of INVEST. His goal is to help people and organizations live an authentic empowered life.
Lawrence can be reached at: Lford@consciouscapitlawm.com or 860-659-8299
Lawrence Ford is a Registered Representative of INVEST Financial Corporation (INVEST), member FINRA/SIPC. All expressions of opinion in this commentary reflect the opinions of the author and not necessarily those of INVEST. This commentary does not constitute an offer to sell or a solicitation to buy any security. INVEST does not offer tax and/or legal advice and it is strongly recommended you consult with your legal or tax professional for guidance on your particular situation. INVEST offers securities and is not affiliated with Conscious Capital Wealth Management, LLC.
A portion of this material was provided by FMG Suite.