More than one person has said that “age is just a number”. Indeed, it is a number, and it’s a number that, in some instances, can be consequential when it comes to making decisions about retirement. Regardless of what your age is when you retire, you will face milestone ages at which you become entitled to benefits – or even lose benefits. What follows are a few of the most common milestones, many of which apply to the Thrift Savings Plan.
Age 55 (50 for special category employees) – If you separate in (or after) the year in which you reach these ages, you will be able to withdraw from your Thrift Savings Plan without facing the 10% early withdrawal penalty.
Age 59 ½ – At this age your withdrawals from your Roth TSP will become qualified (as long as you’ve had the Roth balance in your account for five or more years) and earnings will not be taxed. Any withdrawals from your Roth TSP balance prior to 59 ½ will result in the part of your withdrawal that comes from earnings being taxed for federal income tax. Also, at this age you will be able to take penalty free withdrawals from any Individual Retirement Arrangements (IRAs) that you have.
Age 62 – The Retiree Annuity Supplement ends for FERS retirees and the CSRS Offset kicks in for those few retirees who are considered to be “CSRS Offset”. Also, you will be eligible to apply for Social Security retirement benefits at 62, though you are not required to.
Age 65 – You will become eligible for Medicare. It makes sense to apply for Part A. If you’ve worked past the age of 65 at your federal job, or at any job that provides you with health insurance, you can delay your decision on whether or not to apply for Part B. If you’re retired at age 65, you should make your decision as to whether or not to apply for Part B. If you are retired military and covered by TRICARE, you will be required to elect Medicare Part B at age 65, whether you are working or not.
Social Security full retirement age – this will be age 66 or 67 for most of us. You are no longer subject to the Social Security earnings test.
Age 70 – If you haven’t yet applied for Social Security, you should do so now, as your benefit will not continue to receive delayed retirement credits after this age.
Age 72 – At this age you must begin taking required minimum distributions from most of your retirement accounts. This does not include Roth IRAs but does include your TSP (both traditional and Roth) unless you are still working at your federal job.
Even though we may be retired at many of the ages referenced above, we still need to pay attention!