When do you plan to retire? Your decision will be affected by many personal and financial factors, including what you do (or don't do) today! Preparation and periodic review of your financial situation and retirement goals will help you make the best decisions on certain retirement milestone dates — like the ones listed below.
1. Today – What better time to evaluate your retirement plans than today? Do it now, before any of a hundred daily distractions take your attention away from this important task. Start by using the MoneyTips Retirement Calculator and see if you are financially on track to meet your retirement goals. If not, try different scenarios to set new targets and get you back on the right path.
2. Age 59-1/2 – This is the first age where you can take funds out of your IRA and 401(k) without early withdrawal penalties. Generally, it is best to let your retirement funds grow beyond the initial withdrawal period — but that depends on your personal situation. Unemployment or unexpected financial situations may make it reasonable to start withdrawals early.
3. Age 62 – You can file for Social Security benefitsbeginning at age 62 — but you probably shouldn't. Filing before your full retirement age (FRA) causes a reduction in benefits of 6.67% for up to three years, and then 5% beyond that until you reach FRA. For example, if your FRA is 67 (see numbers 5 and 6 below), filing at 62 means your benefits are cut by 30% for all years that Social Security is drawn.
RELATED: Here's how to enjoy your retirement on a reduced income:
26 tips for enjoying retirement on a reduced income
26 tips for enjoying retirement on a reduced income
What can you reduce or eliminate?
Cable TV. Consider an internet streaming service such as Hulu, Netflix or Amazon Prime, which can cost as little as a few dollar per month.
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Landline phone service. Consider ditching your landline and using only your cell phone. These days, many landline calls are unwanted robo-calls. In the current era of email, texting and Facebook messaging, people don't talk on the phone nearly as much as they used to.
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Expensive cell phone plans. While modern cell phones offer many capabilities such as maps, internet access and texting, consider what you actually use and what you could do without
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Gym memberships. If you use the gym regularly, then your membership fee provides good value. But if your road to the gym is paved with good intentions, yet you rarely go, cancel it. Some health insurance plans offer free or reduced gym memberships through the Silver Sneakers program.
Cars. After you retire, you can probably get by with just one car or perhaps no car at all. The cost of Uber, Lync, taxis or bus passes may seem like a lot of money trickling out of your pocket, but when you consider the money you're not spending on gas, maintenance, license fees and insurance, it's probably much less expensive. You can rent a car when you want to take a weekend trip or have a special need.
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Subscriptions. If you find that you don't regularly read the magazines or newspapers you subscribe to, don't renew them next time they come due. Most of their content is available online. If you subscribe to anything else that arrives at a regular interval, such as books, music or wine, consider whether you would be better off buying these items only when you need them. Subscription deals always work in favor of the seller.
Shop online. It's easier to compare prices, which could help you snag better deals. While you can't see and touch the item in person, you gain the benefit of reading other people's reviews and comparing prices and features from multiple sources side-by-side. If you see a box for a promotion code during the checkout process, search for a coupon code.
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Use coupons. While it can be a hassle to cut out, collect and carry coupons, they really do help you save money. Be careful not to buy stuff just because it seems cheaper. Buy only those items you regularly use or have a current need for.
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Stock up on things when they are on sale. But don't stockpile things that may expire before you get a chance to use them.
Own a stand-alone freezer. This allows you to take advantage of sales, and you can buy the larger quantities that are sold at wholesale clubs such as Costco and Sam's Club.
Check out grocery store loyalty programs. Many stores offer special deals to customers who belong to their loyalty program. You can load coupons onto your account, eliminating the need for paper coupons. In some markets, stores offer discounts at local gas stations or they will contribute money to a non-profit of your choice based on the amount of your purchases.
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Senior discounts. Don't be bashful or self-conscious about asking for discounts. In many markets, the major grocery chains offer a 10 percent discount to people over 55 on a certain day every month. Find out what's available in your area.
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Check your receipt. Watch the monitor screen at the cashier station and check your receipt before you leave the store. You might be surprised how often sale prices and loyalty card discounts are not applied properly.
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Visit dollar stores and discount outlets. Maybe it's not elegant, but dollar stores and discount outlets such as Big Lots, T.J. Maxx, Marshall's and Home Goods offer fantastic values. However, resist the temptation to buy things just because they are cheap.
Avoid shopping malls. Mall stores rarely offer good prices. They thrive on price-insensitive shoppers who browse the stores for recreational shopping.
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Look for the best value. The best value is often not the cheapest option. If the item wears out or breaks quickly, you haven't really saved money. Conversely, the most expensive options are usually loaded with features you don't need. The sweet spot is usually somewhere in the middle, where you will find the ideal combination of price and quality. Consumer Reports (the magazine or the website) is an excellent resource for finding the best value for many items that you purchase.
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Get insurance quotes at least every two years. Insurance companies know that once you sign on with them, you will probably automatically renew each year. While it's easy to get quotes online, it may help to speak to an agent and ask if there is anything they can do to lower your rates.
Buy ebooks rather than physical books. Ebooks are cheaper, they don't take up space, they are easier to travel with and you save on shipping. If you don't have a Kindle device, Amazon offers a free Kindle reader app for most modern computers, tablets and smartphones.
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Why pay for what you can get for free?
Libraries. Use your local library for books, music and movies.
Free wi-fi. If you are a light internet user, you may be able to get by without internet service to your home unless you are using an internet streaming TV service. Starbucks and other coffee shops offer free wi-fi, and some restaurant chains are following suit. Your local library may also offer free wi-fi.
Discounted or free tickets. Goldstar.com offers substantial discounts to local productions and some national touring acts in many major cities. Fillaseat.com offers free surplus seating, and check out VetTix.org if you're a veteran.
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Colleges.Local colleges offer many types of performances that are sometimes free to the public. They are usually of good quality, and the students will appreciate having an audience to perform for.
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Museums. Many museums have free days or evenings on a weekly or monthly basis.
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Theaters. Theaters may offer discounted admissions to pre-opening night dress rehearsals or abbreviated lunchtime performances.
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Eat out less expensively. Avoid appetizers, alcohol and desserts. These are the higher mark-up items. You can enjoy these at home before or after you go. Eat out at lunch rather than at dinner, because many restaurants have cheaper lunch menus. Look for coupons, senior discounts and deals through sites such as Groupon and Living Social. Sign up for the email list of the restaurants you dine in most often.
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4. Age 65 – You haven't reached FRA yet for Social Security filing, but you do become eligible for Medicare— and you need to apply during your initial enrollment period (plus or minus three months from the month that you turn 65). If you fail to sign up, your Part B premium may increase by 10% and continue to do so for every 12 months that you fail to enroll.
5. Age 66 – If you were born before 1955, you will reach full retirement age (FRA) at 66. Those born from 1955 to 1959 reach FRA between ages 66 and 67. Once you reach FRA, you can file for Social Security and claim full retirement benefits. You can also choose to delay filing for benefits and gain an extra 8% in annual benefits for each year that you delay your filing.
6. Age 67 – For those born in 1960 or later, the FRA is 67 years. The same rules apply on filing for benefits or delaying them to receive extra benefits. All the increases that you accumulate by delaying your filing apply for as long as you receive Social Security benefits.
7. Age 70 – If you haven't filed for Social Security yet, there's no reason to delay beyond age 70. Waiting beyond age 70 does not earn any extra benefits. Meanwhile, If you have a traditional IRA or 401(k) retirement fund and have not taken any withdrawals out of it yet, you will generally need to start taking out minimum withdrawal amounts (based on your expected lifespan) by April 1 of the year after you turn 70-1/2.
If you are fortunate enough to have a healthy IRA or 401(k) along with significant Social Security benefits, you may want to take out a portion of the retirement funds strategically before minimum withdrawals apply. It all depends on your tax bracket and income at various stages. Consult a tax professional if that situation applies to you.
Regardless of when — or if — you decide to retire, it's wise to review your retirement plansperiodically as life circumstances change. You do not even need to wait until the milestone ages listed above. Adjust your retirement plans occasionally before retirement in order to avoid unpleasant adjustments after retirement.