If you’re getting close to retirement age you may have thought a lot about exactly when and what age to retire but, more than likely, you haven’t thought about the actual, specific date itself. The fact is, the actual month that you retire can affect a number of things including your work benefits, Social Security benefits and your vacation pay. Of course it can (and probably will) also affect your taxes too.
What you need to remember is that, when you begin collecting Social Security, if you are still working or you’re younger than the full retirement age, if you make more than $14,160 your actual benefits from Social Security could be reduced. In the end what this does is give you an incentive or to retire at an earlier part of the year rather than later, so that you can earn the most money that year without exceeding this limit.
During your first year of retirement, provided that you earn $1180 or less for a specific month, you are entitled to get your full Social Security benefits for any full month that you are retired.
One reason that you may consider to retire later involves your tax planning. If you earn a high income will you may want to push off retirement until later in the year and push your benefits to the following year so that you can avoid the earnings limit. Additionally, the longer that you delay getting your benefits the closer that you will be to your full retirement age and the full Social Security benefits that come with it.
Depending on how long you have worked at your current company you may have quite a bit of vacation pay that you saved up. If you’re nearing retirement what you need to do is make a note of when you’ll be receiving the lump sum of vacation pay that’s due to you. There are some companies that won’t pay this amount until a month or more after your retired. Since vacation pay is also considered earned income, you may want to delay applying for Social Security until after you’ve received your vacation pay check. This is another tactic to avoid the earnings.
Many things are different if you are in the military and planning on retiring. The fact is, since you’re in the military you will get specific federal benefits and these benefits could very well be affected by your specific retirement date. If you’re interested in finding out more about this service to www.myfederalretirement.com for more information.
If you’ve been laid off or pushed into retirement in the month of January or February it’s possible that you will be eligible to have your health insurance premium subsidized for an extended length under COBRA. This is a bit of federal legislation that allows workers that leave their employer to remain on their employer’s group health plans. This subsidy also pays 65% of any premiums for terminated workers.
If you are going to be very any IRAs to walk in and want to talk to a financial expert to find out exactly how the laws changed as far as taxes are concerned. Indeed, if you’re close to retiring to update financial specialist yet, now maybe times to make sure that the plans, investments and retirement accounts you have are all the correct ones for your financial situation.