By Paul Partridge

There are key ages in retirement planning that we all need to pay attention to. For example, 2018 is a critical year for you if you were born in:


Why? Once you reach age 70½ (and every subsequent year) you’re required by the IRS to take distributions from retirement plan accounts such as IRA’s, 401(k)’s, 403(b) and 457(b) plans. There’s an age-based formula for determining the Required Minimum Distribution (RMD) owed each year. Employed persons can delay RMDs until the year they retire (unless you’re a company owner). Others face stiff IRS penalties if they don’t comply.


Why? If you haven’t started collecting Social Security benefits yet, congratulations! You’ve maxed out your benefit and now stand to enjoy a payment boost of 8% per year for each year you’ve delayed benefits past your full retirement age. So if your full retirement age was 66, your Social Security benefits will be 32% higher than if you started collecting in 2014. But don’t wait any longer; there are no further increases after age 70.


Why? Baby boomers born in 1952 turn 66 in 2018. In the eyes of Social Security you’ll reach your full retirement age on your birthday. That means you can collect your full benefit starting this year (if you started collecting prior to this year, you will continue receiving a reduced payment). It also means you can work AND receive Social Security benefits without getting penalized or having benefits withheld.


Why? This is the year to sign up for Medicare. You have a 7-month enrollment window, including the 3 months prior to your 65th birthday, the month you turn 65, and the 3 months after you turn 65. It’s important to sign up this year, unless you’re employed with a company that has group health coverage (in that case you’re allowed to enroll within eight months of leaving the job). Those who don’t sign up on time face higher premiums for Medicare Part B and Part D.


Why? You’re eligible to start receiving Social Security benefits starting at age 62 if you choose. Many people are tempted to take benefits as soon as they’re allowed. Before you decide, consider this: payments are permanently reduced by as much as 30 percent if you file at 62. Also, if you’re working and collecting Social Security at the same time, part or all of your payments could be temporarily withheld if your income is over $17,040.


Why? Age 59½ marks the first time you can take penalty-free distributions from your retirement plan accounts such as IRA’s and 401k’s (income taxes are still owed to the IRS on each withdrawal). Prior to age 59½ withdrawals come with a 10 percent early withdrawal penalty (in addition to any income taxes owed). If you leave a job after age 55, there’s zero penalty if you withdraw money from the 401k account associated with your most recent job.


Why? Men and women who reach age 50 in 2018 can defer taxes on up to $24,500 in contributions to 401k and 403b plans. Likewise if you’re 50+ you can deduct up to $6,500 for IRA contributions. This is a $6,000 401k/403b boost and a $1,000 IRA boost from the tax-deductible amount you could contribute last year.

If you are not saving the max currently, consider increasing your contributions to help reach your retirement savings goals.