Money Matters

Starting at age 50, there are specific things you can and should do to prepare for retirement.

A 2019 study found that nearly 48 percent percent of Americans age 55 and older don’t have a traditional pension plan or any retirement nest egg.

Considering that retirees need about 80% of their preretirement income each year, that’s worrying.

The good news is that there is always something you can do to prepare to have a comfortable retirement, even when that last day of work is just around the corner.

Here are some tips to get you started:

Know retirement deadlines and follow this checklist

Age 50: You can start making “catch-up” contributions to employer-sponsored retirement plans.

Age 62: You can choose to begin receiving Social Security benefits.

Age 65: You may be eligible for Medicare.

Age 66: You may be entitled to full or unreduced retirement benefits.

Age 70: If you start taking Social Security now, you will get the biggest possible monthly benefit. But if you wait any longer, benefit amounts won’t increase.

Age 72: You must begin taking required minimum distributions from traditional Roth 401(k)s or traditional IRAs.

With these deadlines in mind, start working on this checklist:

Decide when it makes sense for you to start Social Security: You can start at 62, but each year you wait, the benefits grow.

Sign up for Medicare or health insurance that doesn’t come from your employer: Medicare coverage can begin at age 65 for everyone.

Check your retirement benefits: See what pension or other benefits you qualify for from your employer and check to see if you are eligible for benefits from a former employer.

Take advantage of last-minute benefits at work: Get your teeth cleaned, pick up a new pair of glasses and make one last matched charitable donation.

Figure out if you should keep your 401(k) or roll it over to an IRA: Depending on how your 401 (k) is doing, an IRA may have better investment options for you. So do a little research and decide what is best.

Make a financial plan: Base it on expected Social Security and pension benefits, investment earnings, part-time work earnings and your retirement savings.

Start or continue contributing to your HSA

The benefits of using a health savings account (HSA) add up quickly.

“A health savings account (HSA) can provide a triple tax break: Your contributions are tax-deductible (or pre-tax if through your employer), the money grows tax-deferred, and you can withdraw it tax-free for eligible medical expenses at any time,” says Kimberly Lankford at AARP. “And when you turn age 65, you can withdraw the money tax-free for even more expenses.”

You can’t make HSA contributions if you are enrolled in Medicare Part A or Part B, so this is something to do while you are still working for a large employer or for a small employer that doesn’t require you to enroll in Medicare. After you are required to stop making HSA contributions, you can keep the money growing in the account for future expenses.

So when and how can you use the money growing in the account?

Before age 65, you can withdraw HSA money for anything other than qualified medical expenses, but you usually have to pay taxes and a 20% penalty.

At age 65 and older, you only have to pay taxes on nonmedical withdrawals.

At age 65 and older, you can take tax-free HSA withdrawals to pay premiums for Medicare Part B, Part D prescription-drug coverage and Medicare Advantage.

Use a retirement calculator

Maybe you’re worried you don’t have enough saved, or maybe you’re confident you do. Either way, it’s good to double-check your hunches with some cold, hard numbers. A retirement calculator can help. Here are a few to help you answer the most important retirement money questions:

Take advantage of time and benefits

Every penny counts, so keep saving what you can, even if you’re only working part-time or on a freelance basis. As long as you’re earning income, you can contribute to a Roth or traditional IRA, up to $7,000 if you’re over 50 and up to $7,000 if your spouse is not working and over 50.

“If someone works from age 65 to 75 and contributes $7,000 each year to a retirement account that grows at 5 percent a year, by age 75 they’d have almost $100,000 saved,” says Patrick Carney, a certified financial planner.

By contributing to a retirement account, you may be eligible for the retirement savers’ tax credit. And if you’re 65, you may be eligible for a tax credit for the elderly.

Whether retirement is a couple of decades away or just a year or two down the road, there are steps you can take to make your golden years the best they can be. Know your deadlines, contribute to an HSA, use a retirement calculator and take advantage of the time and benefits available to you to step into the next phase of your life with confidence.