Significant Financial Birthdays
Have you ever noticed the importance we place on the beginning and end of life’s events? We mention how freshmen are new to high school or college, and get excited when seniors are graduating. Very little is said or thought about the students in the middle. We seem to focus on the milestones. This is also true in sports (first quarter, last quarter), in trips we take (origination and destination), and even as we journey through life. It’s all about students and retirees – with little emphasis on everyone in the middle! I think one of the reasons this is so is because it’s human nature to zero in on the important times in our life when decisions and behavior can seem to matter most.
Here is a list of significant dates, or ‘birthdays’ from a Financial planning software Orlando perspective. I know they are estimates and fairly generalized, but I think they still give us an interesting view of ‘Significant Financial Birthdays’. Notice that it is the middle when we create most of our wealth. But it is the decisions we make at the beginning and end that in some cases are the most significant!
Age 14 – Officially we can start earning money and get a work permit in the state of Indiana.
Age 16 – Acquiring your driver’s license may be one of our biggest birthdays. It means freedom! Mind you, it also means the burdens of a car payment, insurance, and maintenance expenses.
Age 18 – We can start voting, register for the draft, and start paying for a post secondary education or go to work. This is the end of high school and the beginning of our adult life for many of us.
Age 22 – Finish our university education and start a career. No more school expenses, though we might have loans to start paying back.
Age 23 to 50 – This is the middle, and where life really happens. We advance in our careers, start families, buy homes, etc. This is also when we build wealth by investing in stocks, 401(k)s, real estate, etc.
Age 50 – Now we’re starting to focus on retirement, even though it may still be a decade or more away. One of the ways employees with certain qualified retirement plans can do this (if they are able) is to begin making annual catch-up contributions in addition to their normal contributions.
Age 59 ½ – Many of us are winding down, ending or have ended our corporate careers. We are also starting to reinvent ourselves in new careers. The financial significance of this age is we can start taking withdrawals from qualified retirement plans without incurring a 10% federal income-tax penalty.
Age 62 – If we contributed and qualify, we are now able to draw Social Security retirement benefits. This is a complicated decision for most people. Make sure you get some help and understand the Dos and Don’ts of Social Security income.
Age 65 – Ten thousand Baby Boomers are turning this age every day! It is the age individuals can qualify for Medicare. One important point – 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.
Age 65-67 – A few years ago Social Security moved the minixmum age to receive full benefits from 65 to 67 for some individuals. The change is prorated based on your age. As an example, individuals born in 1955 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.
Age 70 – You need to do two things when you turn 70 and 70 ½. Apply for Social Security and start distributing assets from your IRAs or qualified accounts in most cases. The amount you have to distribute is calculated using minimum distributions (RMD) tables. RMDs are based on your account balance and life expectancy.
There is a reason why we put candles on the birthday cake. We need to know how far we’ve travelled along the road of life, and we want to mark the occasion in a memorable way. Your ‘Financial Birthdays’ are just as important, so be sure to celebrate them.
Resource By : http://corewealthconsultants.com/significant-financial-birthdays
Here is a list of significant dates, or ‘birthdays’ from a Financial planning software Orlando perspective. I know they are estimates and fairly generalized, but I think they still give us an interesting view of ‘Significant Financial Birthdays’. Notice that it is the middle when we create most of our wealth. But it is the decisions we make at the beginning and end that in some cases are the most significant!
Age 14 – Officially we can start earning money and get a work permit in the state of Indiana.
Age 16 – Acquiring your driver’s license may be one of our biggest birthdays. It means freedom! Mind you, it also means the burdens of a car payment, insurance, and maintenance expenses.
Age 18 – We can start voting, register for the draft, and start paying for a post secondary education or go to work. This is the end of high school and the beginning of our adult life for many of us.
Age 22 – Finish our university education and start a career. No more school expenses, though we might have loans to start paying back.
Age 23 to 50 – This is the middle, and where life really happens. We advance in our careers, start families, buy homes, etc. This is also when we build wealth by investing in stocks, 401(k)s, real estate, etc.
Age 50 – Now we’re starting to focus on retirement, even though it may still be a decade or more away. One of the ways employees with certain qualified retirement plans can do this (if they are able) is to begin making annual catch-up contributions in addition to their normal contributions.
Age 59 ½ – Many of us are winding down, ending or have ended our corporate careers. We are also starting to reinvent ourselves in new careers. The financial significance of this age is we can start taking withdrawals from qualified retirement plans without incurring a 10% federal income-tax penalty.
Age 62 – If we contributed and qualify, we are now able to draw Social Security retirement benefits. This is a complicated decision for most people. Make sure you get some help and understand the Dos and Don’ts of Social Security income.
Age 65 – Ten thousand Baby Boomers are turning this age every day! It is the age individuals can qualify for Medicare. One important point – 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.
Age 65-67 – A few years ago Social Security moved the minixmum age to receive full benefits from 65 to 67 for some individuals. The change is prorated based on your age. As an example, individuals born in 1955 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.
Age 70 – You need to do two things when you turn 70 and 70 ½. Apply for Social Security and start distributing assets from your IRAs or qualified accounts in most cases. The amount you have to distribute is calculated using minimum distributions (RMD) tables. RMDs are based on your account balance and life expectancy.
There is a reason why we put candles on the birthday cake. We need to know how far we’ve travelled along the road of life, and we want to mark the occasion in a memorable way. Your ‘Financial Birthdays’ are just as important, so be sure to celebrate them.
Resource By : http://corewealthconsultants.com/significant-financial-birthdays
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