This Handbook provides an overview of federal laws affecting the elderly and retirement issues. Information discussed includes age discrimination in employment, elder abuse & exploitation, power of attorney & guardianship, Social Security and other retirement and pension plans, Medicare, and much more in 22 pages of materials.
Retirement Rules For Social Security In Michigan
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US-001HB
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You can start receiving your Social Security retirement benefits as early as age 62. However, you are entitled to full benefits only when you reach your full retirement age. If you delay taking your benefits from your full retirement age up to age 70, your benefit amount will increase.
If you were born in 1942 or earlier, you are already eligible for your full Social Security benefit. If you were born between 1943 and 1954, your full retirement age is 66. If you were born between 1955 and 1959, your full retirement age increases gradually until it reaches age 67 for those born in 1960 or later.
The safe withdrawal rule is a classic in retirement planning. It maintains that you can live comfortably on your retirement savings if you withdraw 3% to 4% of the balance you had at retirement each year, adjusted for inflation.
In tax year 2023, Michigan began a four-year phase-out of its retirement income tax. By the 2026 tax year, pensions and income from 401(k) and IRA withdrawals will be fully exempt from state income tax. In the meantime, you may qualify for tax relief depending on your age or occupation.
Lowering MI Costs Plan Although subject to a temporary 4-year phase-in period beginning tax year 2023, this new law essentially restores the pre-2012 retirement and pension subtraction for most taxpayers in Michigan beginning in 2026.
The earnings limit for people reaching their “full” retirement age in 2025 will increase to $62,160. (We deduct $1 from benefits for each $3 earned over $62,160 until the month the worker turns “full” retirement age.) There is no limit on earnings for workers who are "full" retirement age or older for the entire year.
The SECURE 2.0 Act increases 401(k) and SIMPLE IRA catch-up contributions for people age 60-63. Starting in 2025, the maximum additional catch-up contribution will increase from $7,500 to $11,250 for individuals who are between the ages of 60 and 63. This amount will be indexed for inflation annually after 2025.