If you are in or soon aiming for retirement, here are some things you probably should know. Let’s see if you do.
1.
At what age can you qualify for extra catch-up contributions for 11th-hour boosts to retirement accounts?
(Choose one.)
- 50
- 55
- 60
- 65
2.
True or false?
You owe no taxes on required minimum distributions (RMDs) from 401(k)s and traditional IRAs because of the tax advantages of the accounts.
3.
What is the average monthly Social Security benefit for a retired worker older than 62 and their spouse?
(Choose one.)
- Less than $1,000
- Between $1,000 and $1,999
- Between $2,000 and $2,999
- More than $3,000
(See answer below.)
4.
What portion of retirees say that they saved enough for retirement, given their conditions?
(Choose one.)
- One fourth
- One third
- One half
- Two thirds
(See answer below.)
5.
True or false?
If you’re still working, you can’t collect Social Security retirement benefits.
(See answer below.)
Answers
1.
a) 50
Participants 50 or older at the end of the calendar year are allowed to chip in beyond the basic contribution limits for employer-based 401(k)-type retirement plans as well as for IRAs and Roth IRAs. For more information, visit the IRS page on catch-up contributions.
Learn more
- Retirement topics – Catch-up contributions, from the IRS
- Retirement 101: Having a plan, a Money Talk Video with Tom Pappenfus
2.
False
The tax advantage was that your contributions to the accounts were not taxed. Withdrawals, though, are considered taxable income. Talk with your advisor and tax professional about how best to plan for RMD taxes. And, if you don’t need the income from the RMDs, look into qualified charitable distributions, through which you can avoid taxes by contributing your RMD directly to a charity.
Learn more
- Taxation of Retirement Income, from the Financial Industry Regulatory Authority
- Retirement plan and IRA required minimum distributions FAQs, from the IRS
- Deciding which retirement accounts to tap, a Money Talk Video with Dave Sandstrom
- When should I …take my required minimum distribution?
- An IRS FAQ on qualified charitable distributions from IRAs
3.
d) More than $3,000
It’s $3,030, according to the Social Security Administration. Each retiree’s benefit is based on a number of factors, including amount and years of earnings and also the age at which the retiree starts claiming benefits.
Learn more
- Knowing when to tap Social Security, by Joel Dresang
- When to Start Receiving Retirement Benefits, from Social Security
- Starting Your Retirement Benefits Early, from Social Security
4.
c) One third
According to a survey by the Employment Benefits Research Institute, half of the retirees reported saving less than what they needed for retirement. The other 17% said they saved more than what was needed. Planning ahead helps, especially when preparations are based on advanced estimates of how much you’ll need.
Learn more
- Having the confidence to retire, a Money Talk Video by Art Rothschild
- Retirement investing: Where to begin, a Money Talk Video by Kyle Tetting
5.
False
You can keep working and still receive Social Security. But, if you’re younger than your full retirement age (between 66 and 67, depending on your birth year), and if you earn above a certain amount, Social Security temporarily reduces your benefits. After you reach full retirement age, Social Security boosts your benefit to give you credit for the past withholding.
Learn more
- Receiving Benefits While Working, from Social Security
- How Work Affects Retirement Benefits – Overview, a video from Social Security
- 7 Things to Know About Working While Getting Social Security, from AARP
- Unretirement: Part of retirement planning, by Joel Dresang
Compiled by Joel Dresang