Seven Steps to Take at Age 59 1/2

When you turn 59 1/2, you reach a small milestone. You're old enough for your birthday cake to light up the room, and you are able to start spending, without penalty, the money you've accumulated in your IRAs and other retirement-savings accounts.

It's not cause for a huge celebration, but it is a good time to take stock of savings, pensions, Social Security and all the other financial issues that seemed totally meaningless just a few years ago when retirement was an eon away. Now you are only a handful of years from 65, and those years will go faster than you think.

Take this opportunity to examine these seven financial issues while you're still in a good position to do something about them.

1. The gold watch and other benefits. Ask the human resource department or the accounting department to figure out what, if any, money or insurance you'll be entitled to when you retire. If part of it is in the form of company stock or options, ask what can be done to ensure that you'll be eligible to sell the stock and pay taxes at the 15-percent capital gains rates instead of regular income tax rates.

2. Hunt for missing money. Make a list of all the past employers for which you worked for more than a year. Call the human resource departments and ask if you are entitled to any retirement benefits. If you are, make sure that the employer has your current address and marital status -- unless you really want your ex-spouse to have a claim. If the plan calls for naming a beneficiary, update that information.

If your former employer has gone out of business or for some other reason has ended its defined-benefit plan, you still may be entitled to money. The Pension Benefit Guarantee Corp., a federal corporation created by the Employee Retirement Income Security Act of 1974, or ERISA, will help you find it. You can search for missing pensions at Pension Benefit Guaranty Corporation's Web site.Likewise, if you left your 401(k) plan with a former employer and lost track of its whereabouts, try looking for it at the new National Registry of Unclaimed Retirement Benefits search site.3. Maximize Social Security. Social Security is under the microscope, and there could be changes. But no matter what happens, it's probably safe to say that the longer you work and the more you earn, the more you will get. Right now, Social Security calculates the amount you'll receive based on earnings over the 35 years in which you earned the most. If you have worked fewer than 35 years, then it will factor in zeros for those years. Working more to wipe out the years in which you made little or nothing can raise your payment significantly. Next: Roth or Regular 401(k)? > Bankrate.com is the Web's leading aggregator of information on financial products including mortgages, credit cards, new and used automobile loans, money market accounts, certificates of deposit, checking and ATM fees, home equity loans and online banking fees. Visit Bankrate.com to get the tools and information that can help you make the best financial decisions.
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Source: Money & Work

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