The Rachel Cruze Show - Crucial Retirement Decisions You Need to Make by Age

Starting point is 00:00:05 The retirement process can feel like a lot of hoops to jump through. And since this is something that everyone is going to face at some time, I'm going to be sharing seven age-specific rules that you need to know when it comes to retirement. Be sure to like, subscribe, and share this episode with a friend. Okay, so here are some common questions that I get when it comes to retirement, and the answers are actually age-specific. Okay, so number one, when can you roll a 529 college fund into a raw? IRA retirement account. So this is something that was passed a few years ago, which was wonderful, is that if you have money in a 529, you can actually roll some of that money into a Roth IRA. A 529 is a college fund, but if you don't use all that money and it's sitting in there,

Starting point is 00:00:53 you can actually use some of it. So if this account has been open for 15 years or more, you can roll up to $35,000 from a 529 into a Roth IRA. which is absolutely incredible. So remember that. And what's important, too, is when you can do that and you can, let's say that, you know, your past 21 and maybe your parents have had that open since you were a kid, like you can start actually funding your Roth pretty aggressively, which is incredible because compound interest is your friends. Now remember, if you do get scholarships, you can actually withdraw the same amount of your scholarship from the 529 without the 10% penalty, which is wonderful as well. All right. Number two,

Starting point is 00:01:35 When can you start making catch-up contributions? So when you are funding your Roth IRA or your 401K or your traditional IRA, there are limits of how much money you can put into that account every single year. But once you hit 50 years old, you can contribute an additional $7,500 per year to your 401K. The usual limit is $23,000. But again, once you hit 50, you can do some catch-up contributions. Now, for an IRA or a Roth IRA, the limit is $7,000 a year. But once you turn 50, you can contribute an extra $1,000 per year.

Starting point is 00:02:13 All right, number three, when can you withdraw retirement funds without penalty? You have to be 59.5 before you can start pulling money out of your retirement accounts. And again, those accounts are going to be your 401k, Roth IRA, 403B, traditional IRA, all of that. Those are retirement accounts. But once you hit 59 and a half, you can actually start pulling money out without penalty. Number four, when can you claim Social Security? So when you hit the age of 62, you can start claiming. But if you wait until full retirement age, which is 66, 67, kind of depends on the year.

Starting point is 00:02:48 At that point, you can actually receive a higher amount if you wait. Now, the maximum benefit comes at age 70. So if you wait until age 70, you will receive more of that Social Security, which is amazing. Number five, when are you eligible for Medicare? 65 years old. So this is where your health insurance can be taken over by Medicare. We actually have Ramsey Trusted advisors that can walk you through what Medicare coverage looks like and some options there.

Starting point is 00:03:16 So I'll leave a link below if you're checking that out. But health insurance is still really important, obviously, regardless of age, and it can get really expensive. So depending on if you can self-fund your own, if you can't at age 65, you can tap into Medicare. All right, before I share more, I do want to tell you about one of our amazing sponsors, Delete Me. You guys, data brokers have gotten more creative and are actively becoming more of a threat. And they're out there on the internet collecting your data and then selling your data to data brokers that puts you at risk for scams and fraud.

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Starting point is 00:04:18 And that is why I love Fairwin's Credit Union. Their smart checking and savings bundle was literally designed to line up with the baby steps. So if you're ready to move your money somewhere that support your financial goals, Fairwind is what you've been looking for. Just head to fairwins.org slash Ramsey to open your smart checking and savings bundle today. Number six, what is the required minimal distribution age, which is an RMD? So it's a little confusing here, but listen, once you hit a certain age, you are required to start withdrawing money from your retirement accounts.

Starting point is 00:04:53 And this is specifically, if they are traditional, So if they're Roth, it's not always the case. Mostly never the case. But traditional accounts, traditional 401k, traditional IRA, you have to start pulling money out because when you have originally funded those accounts, you did it with pre-tax dollars. Before you were taxed on your income, your money went into these accounts, which means you have to pay taxes on the growth. Versus a Roth account, you fund that Roth account after you pay taxes. So it's your after-tax income. you use the money that hits your bank account to fund those retirement accounts. And because of that, you've already paid taxes.

Starting point is 00:05:31 The traditional ones, you have not. And they want their money. So you can't just let it sit there. You actually have to start pulling money out. Now, that age is at 73. So if you turn 73 between 2023 and 2032, then you must start pulling out, again, money from traditional IRAs, CEP IRAs, simple IRAs, most forward. 401k's. And again, the age is different, and the calculation of how much you have to pull out

Starting point is 00:06:00 is a little different. It gets a little complicated. But remember, you are going to hit an age that you have to start pulling money out. Now, the number one, most important thing to remember when it comes to retirement investing is that it's never too early or too late to invest. So we talked about retirement a lot, specific ages that you have to be to do certain things. But wherever you are, you guys, let this be a goal. So if you have debt, get that paid off. If you don't have emergency fund, get an emergency fund, get some cash in the bank. But then start looking towards retirement and funding 15% of your income into retirement is really, really important. And so all of this is going to set you up for more of a stress-free, enjoyable retirement. So yes, will you be

Starting point is 00:06:43 getting Social Security if you've been working? Yeah, but depends on how much you've been working, how much you've put into the system. But I don't want you to depend on that. I want your money to be your future. Now, the Ramsey complete guide to investing is a lifesaver. It walks you through all of this and even more. So I'll put a link down below so you can start checking that out and start thinking about this stuff today. Now, there's always chatter about the right way to build wealth. So always look for those who are doing it successfully over a long period of time. In my episode five simple habits, quiet millionaires swear by. You can check it out. It's right here. Or if you are listening on a podcast, click a link below. All right, you guys, remember to take control of your money and create a life you love.

The Rachel Cruze Show - Crucial Retirement Decisions You Need to Make by Age

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