If you’re nearing the big 6-0, don’t fret too much about getting old. After all, 60 is the new 40, right? Minor stuff aside, there are also some real financial benefits to reaching age 59½. Here are four things to do when you turn 59½ that will help you explore new opportunities and build a strong foundation for your future retirement.
Re-evaluate Your 401(k)
Fifty-nine and a half is the magic age when you can start taking money out of your retirement accounts without penalty. That doesn’t mean it’s time to drain your accounts, but it does give you more options.
Use It as a Safety Net
Having some cash set aside gives you incredible peace of mind, because you know that if you lose a job or your car breaks down, you won’t end up in debt. Up until now, your only real options to bulk up such a fund were a savings or money market account that couldn’t even keep up with inflation. Now that you’re 59½ and the withdrawal penalty is gone, you can actually use your 401(k) as an easily accessible, tax-deferred safety net.
Make Catch-Up Contributions
The IRS allows people 50 and older to contribute extra to their retirement accounts, both IRAs and employer sponsored accounts. Doing so will not only build up your retirement savings, but it can lower your taxable income.
Consider an In-Service Rollover
The major complaint regarding 401(k) plans is the lack of investment options available within a given plan. The average 401(k) plan has only eight to 12 options, according to the Financial Industry Regulatory Authority. That compares with the seemingly infinite options available on the open market. Once you reach age 59½ you may be eligible for an inservice rollover, which allows you to move 401(k) funds into an IRA without penalty even while you still work for the same employer.
Don’t Forget Health Care
Now is an important time to be thinking about our health care. It’s easy to assume that it’s safe to retire now that you have access to all of your retirement savings or even if you wait until you’re 62 and can start receiving Social Security benefits. The mistake that people make when retiring early is forgetting about health insurance.Even though you can access your money penalty-free now, you don’t have access to Medicare until you are 65. If you’re playing with the idea of retiring before 65, start researching your health care options today. Call us to find out your options before you jump.
BEFORE you make any financial move, call with your “Here’s what I’m thinking about doing…” as opposed to the dreaded, “Guess what I
just did..” announcement! We offer a one hour Complimentary Consultation. 800-464-4941.