Are you really retired at 59 1/2 (according to IRA)

[Brook2]

Is it really true that after 59 1/2 - all your retirement funds are released to you to spend without penalties? In other words - are you really 'retired' whether you know it or not?

I am older than 59 - and I've always thought my (Sep) IRA was something untouchable and in the far off distance of time. I guess I spent more time concerned how to contribute to it/manage it rather than when or if I would use it.

Is it time to just look at this as one big lump of money instead of 2?

 

[Out-to-Lunch]

Is it really true that after 59 1/2 - all your retirement funds are released to you to spend without penalties? In other words - are you really 'retired' whether you know it or not?

I am older than 59 - and I've always thought my (Sep) IRA was something untouchable and in the far off distance of time. I guess I spent more time concerned how to contribute to it/manage it rather than when or if I would use it.

Is it time to just look at this as one big lump of money instead of 2?

Yes, once you reach age 59.5, you may access your reitrement accounts without penalty:

https://www.irs.gov/publications/p590b#en_US_2021_publink100090420

After you reach age 59½, you can receive distributions without having to pay the 10% additional tax.

I will disagree with you that this means that you are "retired, whether you know it or not." But yes, you may spend those dollars without penalty.

 

[Al18]

I was retired at 56, because I was able to withdraw from my 401K without penalty at age 55 - this is common.

 

[DrRoy]

No penalties, but you may owe taxes.

 

[JoeWras]

No penalties, but you may owe taxes.

And with Roth, the one thing left to worry about after age 59 1/2 is the taxability of earnings in the account. You have to have a Roth active for at least 5 years to avoid it. Once past that hurdle and 59 1/2, every withdrawal out of a Roth is tax free.

 

[marko]

In other words - are you really 'retired' whether you know it or not?

Access to those funds is an age condition.
'Retired' is an employment condition.
They're not the same thing.

 

[jim584672]

Post 59.5 in my state allows for a $20,000 a year IRA/pension tax exclusion. Advanced calculus for how that works towards blowing out ACA subsidies / benefits, especially if the cliff returns.

 

[pb4uski]

Having penalty free access to retirement accounts and being retired are two entirely different things.

That one is conflated with the other is one of the silliest things that I have ever read on this forum.

 

[marko]

That one is conflated with the other is one of the silliest things that I have ever read on this forum.

Then you need to go back and read some of MY earlier posts and questions!

 

[Brook2]

Having penalty free access to retirement accounts and being retired are two entirely different things.

That one is conflated with the other is one of the silliest things that I have ever read on this forum.

I was making a joke, but jokes don't do well in text. I just truly wanted to know if the government views me as retired (free to release funds). IRA = Individual "Retirement" Arrangement.

 

[ncbill]

And with Roth, the one thing left to worry about after age 59 1/2 is the taxability of earnings in the account. You have to have a Roth active for at least 5 years to avoid it. Once past that hurdle and 59 1/2, every withdrawal out of a Roth is tax free.

Yep, we should have a sticky that says "make sure to setup a Roth account by age 54 1/2"

 

[pb4uski]

I was making a joke, but jokes don't do well in text. I just truly wanted to know if the government views me as retired (free to release funds). IRA = Individual "Retirement" Arrangement.

Sorry then. I don't think that the government gives a rat's you-know-what if you are retired or not... just don't take the money out before 59-1/2 or you will be penalized and by the time you reach 72 you need to take it out whether you are retired or not so they can get their cut.

Work or don't work... they don't really care.

Perhaps you need a hobby.

 

[Andre1969]

Joke or not, I think it's a valid enough question, and something that most of the masses probably don't know about. What seems like common sense to most of those here on this forum probably goes over the head of most of society with room to spare.

Just for kicks, I just asked my house mate, for retirement/financial purposes, what happens at the age of 59 and a half. He had no idea. So then I asked, "You know that think you put money into for your retirement? What would happen if you tried to take it out now?"

He responded with "I won't get all of it." which was his way of saying he at least understood there would be some kind of taxes/penalties. That's when I told him that at the age of 59 1/2, you can take it out, without the penalty, although you still might owe taxes.

But then, I pressed my luck. I said "Okay, now what happens when you turn 62?"

"You're old!"

 

[marko]

What seems like common sense to most of those here on this forum probably goes over the head of most of society with room to spare.

This is true about so many things, not just turning 59 1/2.

 

[MRG]

Much like Megacorp told me, you don't work her anymore.

 

[Brook2]

Joke or not, I think it's a valid enough question, and something that most of the masses probably don't know about. What seems like common sense to most of those here on this forum probably goes over the head of most of society with room to spare.

Just for kicks, I just asked my house mate, for retirement/financial purposes, what happens at the age of 59 and a half. He had no idea. So then I asked, "You know that think you put money into for your retirement? What would happen if you tried to take it out now?"

He responded with "I won't get all of it." which was his way of saying he at least understood there would be some kind of taxes/penalties. That's when I told him that at the age of 59 1/2, you can take it out, without the penalty, although you still might owe taxes.

But then, I pressed my luck. I said "Okay, now what happens when you turn 62?"

"You're old!"

I think the reason I did not know that is perhaps the laws have changed since I was younger. I remember my grandparents had to wait until they were 65 to collect retirement, and my father too. My friend (local teacher's pension) is also 65. It's not unreasonable to think that number would be something lingering in one's understanding. But I for sure know that I collect medicare at 65. And I can't wait because it will save me about $25,000 a year.