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Kailey Fralick of the Motley Fool says that while smart retirement planning begins on the first day of your very first job, particular focus is needed once you pass the threshold age of 50. With retirement looming, she believes there are four key facts to carefully consider.
The first thing to learn is the use of catch-up contributions to retirement accounts. In 2019, younger workers are allowed to add up to $19,000 to a 401(k) plan and contribute $6,000 to an IRA. Anyone over 50 can put an additional $5,000 into their 401(k) and $1,000 into an IRA, above and beyond the standard limits. If you see a shortfall forming in your retirement accounts, solid benefits can still be gained via these top-ups.
Two trends seem to be shaping up in the retirement universe: people who need or desire to work past the traditional retirement age of 65, and those who want to down tools much earlier. Taking one’s leisure sounds pretty appealing to most, but people in their 50s who do so must take care when making withdrawals from their retirement accounts.
Before age 59½, taking a withdrawal from a 401(k) or IRA requires payment of a 10% penalty fee. There are exceptions: funds can be drawn to pay for a first home or certain educational costs. More generally, withdrawing funds from retirement accounts is bad business. With any luck, you’ll have enough funds in a bank or brokerage account to cover the cost of living.
For more information, please read:
4 Things Every 50-Something Should Know About Retirement Planning | Yahoo Finance