Turning 70 is a milestone worth celebrating. It’s also an age that could lead to a financial reality check. Here are some important pieces of information to know if this is the year of your 70th birthday.
1. You should sign up for Social Security
The Social Security benefit you’re entitled to during retirement is based on your personal earnings history. Once you reach full retirement age, or FRA, you can claim that benefit in full. FRA kicks in at 66, 67, or somewhere in between, depending on your year of birth.
You can also hold off on claiming Social Security past FRA. For each year you do, your benefit grows 8% on a permanent basis.
Once you turn 70, though, the delayed retirement credits you get for waiting to file cease to accrue. And so there’s no financial sense in delaying your Social Security claim beyond that point. As such, your 70th birthday gift to yourself should be your first Social Security paycheck.
2. You can keep working even once you’ve filed for benefits
You might assume that once you start collecting Social Security, you won’t be allowed to earn money from a full-time job. But that’s not true at all.
You’re absolutely allowed to earn an income and collect Social Security at the same time. And once you’ve reached FRA, you can earn as much as you like without having it affect your benefits (whereas if you haven’t yet reached FRA, you’ll be subject to the annual earnings-test limit).
In fact, it could pay to keep working full-time past the age of 70, even with income from Social Security coming in. First of all, those benefits will only replace a portion of your regular paycheck, so if you don’t want to tap your retirement savings just yet, you’ll probably need a second income source to cover your bills.
Also, if you enjoy your job and you’re able to do so remotely so as not to compromise your health given the current COVID-19 outbreak, then it pays to keep at it. Your work may serve as a social outlet of sorts — even if you’re limited to connecting with colleagues remotely. And working is also a great way to stay busy and keep your mind engaged.
3. You can leave your retirement savings untouched a bit longer
It used to be that once you turned 70 1/2, you had to start worrying about required minimum distributions, or RMDs, in your retirement plan. But now, those don’t kick in until age 72, so you have a little more time to leave your savings untapped and let that money continue to grow.
That said, if you’re housing your retirement savings in a Roth IRA, you’ll never have to worry about RMDs. Roth IRAs are the only tax-advantaged savings plan where they don’t apply.
Turning 70 is a big deal. As you prepare for that major milestone, be sure to keep these essential points in mind so you can make smart decisions for your retirement.
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