Milestone Birthdays And Your Finances
Written on November 03, 2023

Milestone Birthdays And Your Finances

Milestone birthdays and your finances.

As financial planners we work with clients in many stages of life. This includes younger generations starting out in their careers, professionals earning and saving, employees preparing for retirement, retirees, and individuals planning for estate distribution to family and charities. Certain ages, determined by law, trigger planning strategies that can make a difference. As our clients move through the different phases of life, we keep these key milestones in mind.

Ages… 21, 50, 59 ½, 62, 65, ~67, 70, 70 ½, 73, and 75
…are key milestones that can cause changes in your financial life.

Below are several common planning questions where your age has a large impact.

  • What is the maximum contribution I can make to retirement accounts?
  • What could my health insurance cost each year?
  • Are my gifts to charity helping reduce my taxes?
  • When should I begin Social Security benefits?
  • How should I fund retirement given my different accounts?

We’ll be covering several important birthdays in this and upcoming newsletters. Here are a few such birthdays to keep in mind.

Age 50

If you are age 50 or older you can contribute additional funds to your IRA or employer retirement plan. Most commonly this affects employees who can contribute an additional $7,500 to their 401k, and savers who can contribute an additional $1,000 to IRAs. These additional contributions can make a big difference.

Ages 62, ~67, and 70

These are three of your options when deciding when to begin receiving Social Security retirement benefits. The earliest you can begin is age 62, but there will be a reduction in your benefit amount. If you choose to wait until age 67* you will receive your Full Retirement Age benefit amount with no reduction.

But you can choose to wait even longer, and you will be well rewarded for doing so! Postponing benefits gives you a riskless 8% increase in your benefit amount for each year you wait up to 70, increasing your benefit by a considerable amount.

As we continue to explore key birthdays and milestones in this newsletter, keep in mind that laws can change over time. We’ll be examining topics from charity, required distributions, taxes and penalties, healthcare, and inheritances. As Wealth Managers we keep up to date with changes in these areas and provide you with the guidance you need to navigate each stage of your financial life.

* Your specific Full Retirement Age may be slightly earlier depending on your birth year.

The Hourglass is an OFM Wealth Publication.  This presentation is not an offer or a solicitation to buy or sell securities. The information contained in this presentation has been compiled from third-party sources and is believed to be reliable; however, its accuracy is not guaranteed and should not be relied upon in any way whatsoever. This presentation may not be construed as investment, tax or legal advice and does not give investment recommendations. Any opinion included in this report constitutes our judgment as of the date of this report and is subject to change without notice.

The views expressed represent the opinions of OFM Wealth as of the date noted and are subject to change. These views are not intended as a forecast, a guarantee of future results, investment recommendation, or an offer to buy or sell any securities. The information provided is of a general nature and should not be construed as investment advice or to provide any investment, tax, financial or legal advice or service to any person. The information contained has been compiled from sources deemed reliable, yet accuracy is not guaranteed.

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