After years of saving and paying taxes, retirement is a time when you can collect Social Security and Medicare, and even qualify for a few extra tax perks. But to make the most of these valuable benefits, you need to meet deadlines. If you don't make the cutoffs, you could face higher taxes, penalties and fees. Make sure you factor these dates into your retirement planning:
Age 50. One benefit of growing older is that you can save extra money in 401(k)s and IRAs. Workers age 50 and older can defer taxes on as much as $23,000 in 401(k) plans, 403(b) plans and the federal government's Thrift Savings Plan and $6,500 in IRAs in 2013—$5,500 and $1,000 more, respectively, than younger employees.
Age 55. If you retire, quit or are laid off from your job in the calendar year you turn 55 or later, you can take 401(k), but not IRA, withdrawals from the retirement account associated with the job you most recently left without having to pay the 10 percent early withdrawal penalty. And public-safety retirees can avoid the early withdrawal penalty if they leave a job in the year they turn 50 or later.
Age 59 1/2. Once you turn age 59 1/2, you no longer have to pay the 10 percent early withdrawal penalty on retirement account distributions. However, income tax will still be due on traditional 401(k) and IRA withdrawals.
Age 62. Workers first become eligible for Social Security payments at age 62. However, your payments will be permanently reduced by as much as 30 percent if you sign up at this age. Also, if you work and collect Social Security benefits at the same time at this age, part or all of your payments could be temporarily withheld.
Age 65. Eligibility for Medicare begins at age 65. You can sign up as early as three months before your 65th birthday if you want coverage to begin the month you turn age 65. If you don't sign up right away, your Medicare Part B and D premiums could permanently increase, and you could even be denied supplemental coverage. "There's basically a seven-month window that you have to sign up for Medicare," says Juliette Cubanski, a Medicare policy analyst at the Kaiser Family Foundation. "After that, you can still sign up but you would face a late enrollment penalty for signing up for Part B later than when you are first eligible." Your monthly Part B premiums will increase by 10 percent for each 12-month period you don't sign up after becoming eligible for Medicare. (If you have a group health plan at work, sign up for Medicare within eight months of leaving the job or health plan to avoid the higher premiums.) There is also a six-month Medigap open-enrollment period that begins the month you turn 65 during which you have a guaranteed right to buy any Medigap policy sold in your state. Once this period ends, you could be denied coverage or face higher costs. New Medicare enrollees are eligible for a free preventative care doctor's visit during the first 12 months they have Medicare Part B.
Age 66. This is the age most baby boomers (those born between 1943 and 1954) become eligible to collect the full Social Security payments they have earned. For people born after that, the full retirement age gradually increases from 66 and two months for workers born in 1955 to 66 and 10 months for those born in 1959. Beginning at your full retirement age, there is also no longer a penalty for working and collecting Social Security benefits at the same time. People born in 1960 or later who sign up for Social Security at age 66 will get 6.7 percent smaller payments than if they wait until age 67.
Age 67. The Social Security full retirement age is 67 for everyone born in 1960 or later. Workers currently age 53 and younger must wait until 67 to collect the full payments they are due and avoid the earnings limit.
Age 70. If you further delay signing up for Social Security benefits, your payments will increase by 8 percent per year up until age 70. After age 70, there is no additional benefit to postponing Social Security payments.