The 22 Age Milestones in Your Financial Journey, Ep #178

Are you familiar with the 22 age milestones that you will experience throughout your—and your children’s—life? Maximizing these 22 milestones is incredibly important for a successful monetary journey through life. Listen to this episode of Best in Wealth to learn what they are and why they are important!

Outline of This Episode

• [1:17] The psychological impact of turning 50
• [2:48] Financial milestones from birth to age 49
• [10:00] Financial milestones after age 50
• [23:44] Apply this information to your life

Your financial journey begins at birth

Did you know that any person’s financial journey begins at birth? How? As soon as a baby is born, you can name them as the beneficiary of a 529 plan. You can invest for them early and throughout their college years. You can start Uniform Transfers to Minors Act (UTMA) or Universal Gifts to Minors Act (UGMA) accounts as well.

The second milestone is when your kids turn 13 and they are no longer eligible for the child independent care credit. It is a huge tax credit to take advantage of for kids who go to daycare. In 2021, that credit for 2 or more kids went from $4,000 to $8,000 but after 13, they no longer qualify.

The age of majority in most states

The next milestone begins at age 18. Your child is no longer eligible for the child tax credit. When your kids are under 6 years, you get a $3,600 credit as long as you fall under the income levels. It is based on last year’s taxes. A lot of people are currently getting monthly checks because the government has decided to give people half of the credit upfront. But since you are getting half upfront, only half will apply when your taxes are filed—which means you may end up owing money.

Another milestone at 18? Kids reach the “age of majority” i.e. when kids are recognized as adults. If they have an inheritance that is not in a trust, they get the money at age 18. It is also the age of termination for UGMA or UTMA accounts. Your child is no longer subject to the kiddie tax. Fun fact—in some states 21 is the age of majority.

What about ages 24 and 26? Listen to learn more about these two milestones!

The Rule of 55

When I turned 50, I became eligible to make catch-up contributions to 401ks, 403Bs, and a 457. That means I can contribute an extra $6,500 for a total of $26,000. With an IRA, I can contribute up to $7,000 a year. If you turn 50 on Dec. 30th, you can make the contributions during the year.

At age 50 you can also become eligible for Social Security if you are a disabled widow/widower.

At age 55, you are eligible to make catch-up contributions to a Health Savings Account (HSA). You can normally contribute $3,600 for an individual or $7,200 for a family. After 55 you can contribute $4,600 individually or $8,200 as a family.

The “Rule of 55” also applies. Some employer plans allow you to take money out without penalty. If you get laid off, fired, or quit your job, you can pull money out of your 401k or 402B without penalty anytime during or after the year of your 55th birthday. If you are an early retiree, there are workarounds (The 72-T rule).

Financial milestones in your latter years

At age 59 ½ you can withdraw money from any other retirement account without the 10% early distribution penalty being incurred. When you turn 60, you can claim social security survivor benefits as a widow or widower early at a reduced rate. It is a great benefit if you need the money.

The next important milestone is age 62—when you can claim social security benefits. I do not recommend drawing social security this early because you will take a large hit on your benefits. When should you collect at 62? If you are in poor health, you have to, or you are worried social security benefits will not stick around.

Age 64 years and 9 months is the start of your initial enrollment period for Medicare. This is your first chance to sign up. The initial period ends 3 months after you turn 65. If you wait and miss your enrollment period, you may pay a surcharge on Medicare Part B for the rest of your life. So get signed up as soon as you can.

You are then eligible for Medicare coverage at age 65, as well as non-medical withdrawals from an HSA without being penalized. You can use the money for anything you want—you will just have to pay taxes when the money comes out.

What about ages 66 and older? What milestones are important to know about your retirement years? Listen to the whole episode for the full picture!

Resources Mentioned

• Social Security

Connect With Scott Wellens

• Schedule a discovery call with Scott
• Send a message to Scott
• Visit Fortress Planning Group
• Connect with Scott on LinkedIn
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• Fortress Planning Group on Facebook

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Podcast Disclaimer:

The Best In Wealth Podcast is hosted by Scott Wellens. Scott Wellens is the principal at Fortress Planning Group. Fortress Planning Group is a registered investment advisory firm regulated by the Securities Act of Wisconsin in accordance and compliance with securities laws and regulations. Fortress Planning Group does not render or offer to render personalized investment or tax advice through the Best In Wealth Podcast. The information provided is for informational purposes only and does not constitute financial, tax, investment or legal advice.

About the author, Scott Wellens

Scott Wellens, CFP® is an investment advisor and founder of Fortress Planning Group. After earning his Bachelor of Science degree from the University of Wisconsin-Oshkosh, Scott quickly ascended to become a Vice President of North American Sales at a major regional provider of telecommunications infrastructure. While financially successful in this role, Scott searched for ways to pursue his passion related to financial literacy and providing financial freedom for both his own family and others. During his search, Scott became curious about the significant gap he found in the financial services sector: he was unable to find a comprehensive financial planner that maintained a family stewardship lens without being attached to financial products. Scott decided to fill that gap by creating his own planning firm that maintains a strong passion for comprehensive, unbiased wealth planning that is genuinely client-centered.

Scott resides in Menomonee Falls, WI with his family. He is the father of three active and independent daughters who keep him on his toes. Scott is an active community member, serving on the Hamilton Education Foundation Board, serves as a Dave Ramsey Financial Peace facilitator and leads the All Pro Dad’s group at their local elementary school. Scott enjoys spending his free time visiting state parks with his family, reading, and watching the Milwaukee Bucks and the Green Bay Packers win ball games.

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