Optimizing your retirement savings takes more than just making sure your IRA isn’t at risk in this market. There are rules and regulations that can help you avoid higher taxes and penalty fees and help you structure your income to minimize taxes. Know these 3 ages that can help you get the most out of your retirement accounts.

Take Catch-up Contributions at 50

At age 50, workers with certain qualified retirement plans can make annual “catch-up” contributions in addition to their normal contributions. In 2022, you can contribute up to $6,000 to an IRA if you are under 50 and an additional $1,000 if you are 50 or older. Those who are 50 or older and participate in a Simple IRA or Simple 401(k) plan can contribute up to $17,000 per year for 2022. Those 50 and older can contribute an additional $6,500 to a 401(k), 403(b), most 457 plans, and a government Thrift Savings Plan in 2022 for a total of $27,000.1

Qualify for Penalty-Free Withdrawals at 59.5

Age comes with benefits. Once you reach 59 ½, you can withdraw from your IRA or old 401(k)s without penalty. If you are retired or have terminated employment and still have funds in your 401(k) plan, you can access them at age 59 ½ and pay no early withdrawal penalty tax. If you have rolled your 401(k) funds into an IRA, the rules are the same. 2

Age 59½ is the earliest you can withdraw funds from an IRA account and pay no early withdrawal penalty tax. If you are still working, you can access funds from an old 401(k) plan once you reach age 59½, but you may not have the same access to funds inside the 401(k) plan at the company for which you currently work. Check with your 401(k) administrator to see if your plan allows what is called an “in-service” distribution at age 59½. Some 401(k) plans allow this, and others do not.

Required Minimum Distributions at age 72

As of 2020, the SECURE Act changed the age at which Required Minimum Distributions begin from 70½ to 72. RMDs apply to qualified retirement plans such as 401(k)s, 403(b)s, Profit Sharing plans, Money Purchase Pensions, IRAs, Simple IRAs, and SEP IRAs3. Now, many retirees have more time to let their retirement savings grow tax-free. RMDs are the minimum you are required to withdraw each year, and you can always withdraw more than that amount.

However, some retirees would prefer to withdraw less than they are required to. Withdrawing more from a traditional retirement account could mean a higher tax burden and an end to tax-free growth for the withdrawn funds. If you forget to take an RMD, it’s going to cost you. There is a 50% penalty based on the RMD you were supposed to take.4 RMDs are based on the total balance of all your IRAs, 401(k)s, and other traditional retirement plans as of December 31st of the previous year.

If you have questions about how to optimize your retirement accounts to minimize taxes and maximize your retirement savings, you can sign up for a time for a complimentary review with us of your financial plan.

5 Smart Tips for Long Flights

One of the best ways to spend your retirement years is by traveling. Seeing the world and ticking off destinations from your bucket list can be exciting! But let’s be honest, the flights are miserable. Movement is restricted, and you sit in one position for hours. It’s important to take measures that make getting from point A to B as comfortable as possible. Whether you’ll be traveling to the Great Wall of China, or deep dive into Mexican cenotes, following these best travel practices can ensure a smoother journey for you.

Less Coffee, More Water

Caffeine induces the loss of water in the body, causing dehydration.5 Coupled with dry in-flight air, you will lose an unnecessary amount of water, possibly leaving you dehydrated and tired by the time you land. So, make sure to hydrate with plenty of water – not soda or juices with caffeine or high sugar content.

Carry a Toiletry Bag

Packing a small bag of toiletries in your carry-on can be a lifesaver! Try incorporating your usual lotion, toothpaste, and cleanser in small TSA-approved containers. Also, be sure to bring your necessary medications, pills, and hygiene products to keep you comfortable and feeling healthy. Not only does this help with refreshing while on the plane or during layovers, but it can be a lifesaver if your luggage gets stuck or lost at baggage claim.

Dress for the Plane, not the Destination

Despite how excited you are about the sandy beaches and blue waters at your destination, the in-flight environment can be cold, dry, and confined. Avoid clothing that doesn’t allow free body movement or leaves you vulnerable to the chilly air. When it comes to traveling, soft, malleable, and warm clothing is your best friend!

Don’t do the Unusual

When going for long-haul flights, it’s best to keep your routine simple. Doing things out of your ordinary habits, like trying out new foods, getting less sleep than usual, or engaging in strenuous physical activity prior to your flight, increases the risk of travel discomfort. And when you’re feeling uncomfortable in an already uncomfortable environment, you can even start to feel sick.

Invest in Good Travel Essentials

Given how long you’ll be stationary, it’s wise to invest in essentials that can improve your journey. These can include items like travel stockings, a supportive neck pillow (try memory foam), an inflatable leg rest, noise-canceling earbuds, and a silk eye mask. These can ensure comfort throughout your airplane sleep or movie marathon.

Planning for a comfortable journey is just as important as planning for a comfortable retirement. To find out how you can better plan and manage your finances in retirement, click here to sign up for a complimentary retirement review meeting.