Retirement Ages to Plan For

Pay attention to these significant retirement milestones.

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Retirement planning is important for every age group. But there are a few specific years in our lives when retirement decisions are especially significant. Here is a list of retirement milestones you should plan for.

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35 to 40. If you haven’t started saving for retirement by this age range, you need to start immediately. The later you start, the harder it gets. Use this guide to help you get started with your retirement planning.

50. Finally you get to make catch up contributions to your retirement accounts. The maximum contribution you can make to your 401(k) once you reach age 50 is $5,500 more than younger people are eligible to defer taxes on in 2010. The maximum contribution limit for IRAs jumps $1,000 at age 50. This is also a good time to reflect on your investment strategy. If you are still too aggressively invested in stocks, you may want to start reducing your risk in your portfolio.

59 ½. You can take money out of your pre-tax retirement accounts at age 59 ½ penalty free. Those who leave their jobs can take 401(k), but not IRA, withdrawals even earlier, at age 55, without penalty. However, you still have to pay income tax on withdrawals.

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62. This year you become eligible to start collecting Social Security. But benefits are reduced if you start claiming at this age.

65 to 67. Workers become eligible for full Social Security retirement benefits between ages 65 and 67 depending on their year of birth. When you reach age 65, you should apply for Medicare as well.

70. If you can delay claiming until age 70, you can receive even larger Social Security checks for the rest of your life. Which claiming age is best for you is largely dependent of how many years you estimate you will collect benefits for.

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70 ½. You are required to start taking withdraws from your pre-tax retirement accounts after age 70 ½ . Forget about this and you will pay a huge 50 percent tax penalty on the amount that should have been withdrawn.

David Ning runs MoneyNing, a personal finance site aimed at helping others change their habits for a better financial future. He suggests that everyone to sign up for an online savings account to get more out of our hard earned money.