Main Questions Asked:

• How can you avoid simple mistakes that can trigger unnecessary fees?
• How can you avoid trap doors that can erase decades worth of hard work and sacrifice?
• How can you have an organized strategy and protect yourself long before you retire?

1. The Social Security Early Enrollment Penalty

We are talking about leaving a lot of money on the table that you have earned. We want to make sure that you get all of that money back that you put into the system.

If you start collecting benefits at age 62, you will receive 25% less per month than if you waited for full retirement age. Waiting may not mean that you are getting more because you have given up four or five years-worth of checks. Everyone’s situation is unique and requires a unique strategy.

2. Medicare Late Enrollment Penalties

There are all kinds of rules for Medicare. If you don’t sign up during the months near your 65th birthday it can result in dramatically increased premiums for the rest of year life. You should sign up three months before your 65th birthday or within eight months of leaving a job with health coverage.

3. 401(k) and IRA Early Withdrawal Penalties

I never or almost never recommend that people take money early out of a 401(k) or IRA. There is a 10% withdrawal penalty from an IRA if you withdraw before age 59 1/2 and before age 55 with a 401(k).

Roth accounts allow more flexibility. You can take an early withdrawal from your contribution amount.

If you have company stock in a 401(k) and you roll it over, you can lose a potential tax break. It is extremely important to consult with an expert when making these decisions.

4. Excessive Investment Fees and Expenses

Half of the people with investments don’t understand the fees and expenses they pay. This is a fast way to lose money without realizing it. The best plan is to minimize expenses.

67% of Americans don’t think they pay any fees. This isn’t even possible. Three to four percent in fees can add up very quickly. Reducing fees is one of the best ways to put money back in your pocket.

5. Required Minimum Distribution Penalty

People are shocked when the IRS forces them to take money out of retirement accounts when they are 72 (updated as of 12/14/2022 to reflect the CARES Act). This can push you into a higher tax bracket and cause you to pay higher Medicare premiums. There are no required minimum distributions with a Roth.