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Dorion-Gray: Why half-birthdays matter after age 50

Most children stop being “and-a-half” somewhere around the age of 12. Kids add “and-a-half” to make sure everyone knows they’re closer to the next age than the last.

When you are older, “and-a-half” birthdays start making a comeback. In fact, starting at age 50, several birthdays and “half-birthdays” are critical to understand because they have implications regarding your retirement income.

• Age 50: Workers in certain qualified retirement plans are able to begin making annual catch-up contributions in addition to their normal contributions. Those who participate in 401(k), 403(b) and 457 plans can contribute an additional $5,500 a year in 2014. Those who participate in Simple IRA or Simple 401(k) plans can make a catch-up contribution of up to $2,500 in 2014. And those who participate in traditional IRAs can set aside an additional $1,000 a year.

• Age 59½: Workers are able to start making withdrawals from qualified retirement plans without incurring a 10 percent federal income-tax penalty. Keep in mind that distributions from traditional IRAs, 401(k) plans and other employer-sponsored retirement plans are taxed as ordinary income.

• Age 62: Workers are first able to draw Social Security retirement benefits. However, if a person continues to work, those benefits will be reduced. The Social Security Administration will deduct $1 in benefits for each $2 an individual earns above an annual limit. In 2014, the income limit is $15,480.

• Age 65: Individuals can qualify for Medicare. The Social Security Administration recommends applying three months before reaching age 65. It’s important to note that if you are already receiving Social Security benefits, you will automatically be enrolled in Medicare Part A (hospitalization) and Part B (medical insurance) without an additional application.

• Age 65 to 67: Between ages 65 and 67, individuals become eligible to receive 100 percent of their Social Security benefit. The age varies, depending on birth year.

• Age 70½: Participants must begin taking required minimum distributions (or RMDs) from traditional IRAs and qualified retirement plans, such as 401(k), 403(b) and 457 plans. RMDs are based on your account balance and life expectancy.

Understanding key birthdays may help you better prepare for certain retirement income and benefits. But perhaps more importantly, knowing key birthdays can help you avoid penalties that may be imposed if you miss the date.

If you have any questions that you would like to see answered here, send them to or 2602 Route 176, Crystal Lake, IL 60014.

• Paula Dorion-Gray, CFP, is a registered representative of Securities America Inc., member FINRA/SIPC and president of Dorion-Gray Retirement Planning Inc. 

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