Are you considering when to file for Social Security benefits? It’s a big decision for many retirees. Your benefit amount is based largely on your career earnings during your working years. However, the age at which you file is also a big factor.
Generally, the earlier you file, the lower your benefit amount is likely to be. You can get your full benefit amount if you file at your full retirement age (FRA). Most people reach their FRA between their 66th and 67th birthdays.1
However, you don’t have to file at your FRA. You can file as early as age 62. Common advice is to delay filing as long as possible. Your benefit amount increases 8 percent for each year past your FRA that you wait to file up to age 70. Conversely, your amount could be reduced as much as 25 percent if you file before your FRA.1
Are you one of the millions of people using an IRA to save for retirement? According to a 2016 study, Americans hold nearly $2.5 trillion in assets inside IRA accounts.1 Most of those assets are held in traditional IRAs, which offer tax-deferred growth and tax-deductible contributions.
Traditional IRAs, 401(k) plans and similar qualified accounts are popular savings tools because of their tax-favored treatment. However, assets in those accounts don’t avoid taxation forever. At some point, the IRS wants you to take taxable distributions from your qualified retirement plans.
The latest you can defer distributions from an IRA or 401(k) is age 70½. At that point, you must begin taking required minimum distributions, also known as RMDs. Your RMD amount is based on your age and your account balance. As you get older, you usually have to withdraw a higher percentage of your account balance each year.