Retirement Planning Calendar by the Decade

Planning your retirement life is never too early.  Below is a checklist you can use to see if you are doing what you should at different states of your life.

In 20's and 30's
  • Get the free money.  If your employer has 401(k) match, get the free money.
  • Contribute to Roth IRA.  If your employer has no 401(k) match, or if you have contributed to get the 401(k) match, fund a Roth IRA.
  • Should you contribute 401(k) or Roth 401(k)?

Don't Dos
  • Don't wait, because in investing, time is your best friend.

In 40's
  • Invest more.  If you haven't reached your maximum 401(k) contribution, now is the time to do so.
  • Rollover your old 401(k).  If you have changed job thus far, do yourself a big favor - rollover your old 401(k) to a discount brokerage that offers super low cost index ETF funds (why this could make a huge difference?).

Don't Do's
  • Don't start your child's education fund contribution until you have maximized your own retirement.  Your child can borrow for college, but you can't borrow for your retirement.

In 50's
  • Age 50: You can now increase your 401(k) or IRA account's annual contribution by the "catch up" amount
  • Age 55: You can now increase your HSA account's annual contribution by the "catch up" amount
  • Age 55: If you decide to retire early, leave voluntarily or laid off from your current employer, you can withdraw from your employer-sponsored retirement plan without the 10% penalty.
  • Age 59.5: You can take money out of any tax-advantaged retirement plan without any penalty. If you keep working at this time, you can rollover any amount from your 401(k) to any kind of IRA, which means you are no longer bound by the 5-year investment period limitation for Traditional IRA rollover to Roth IRA.

Don't Do's
  • Don't accelerate your mortgage payment.  If you plan to downsize your current house as kids have moved out, don't spend money on paying off your mortgage early.
  • Don't wait till your late 50's or 60's to consider long term care insurance.  You could have preexisting condition by then which could increase your LTC premium or preclude you from getting a LTC policy.  

In 60's and up
  • Age 65: You can take money out of your HSA for any use without the usual 20% penalty. But if it's not for medical related expenses, you have to pay income tax on the part of the gain.
  • Age 70.5: Required Minimum Distribution (RMD) from your IRA accounts kicks in.

Carefully consider the best time to start collecting your Social Security check.
  • Should you take social security benefit early and invest the money on your own?
  • Should you wait to collect social security check to maximize the benefit later?  
  • Should the higher earner claim first or the lower earner claim first?
We have identified a few retirement planning related questions above, in the course of next several months, we will answer those questions one by one, so you can make informed number-based decisions.