Boomer Benchmark Presents IRA Puzzler

When a kid's birthday is in the summer, teachers generally let them bring cupcakes into class on their half-birthday. For a little person, this is quite a difficult concept and clearly not as much fun as the real deal.

So when the IRA laws were written in 1974, maybe a bunch of Congressman were still bitter that they spent their lives celebrating their half-birthdays and decided to make 59-and-a-half a monumental age.

Yes, at age 59-and-a-half, you're finally eligible to withdraw money from your IRA, penalty-free. While you still owe ordinary income tax on that money, which could be as high as 35%, the pesky 10% early-withdrawal penalty is gone.

This quirk in the IRA laws takes on added significance now because the first Baby Boomers were born on Jan. 1, 1946; thus, the first ones are celebrating their 59-and-a-half birthdays today. (No word yet on any related spike in cupcake sales.)

So happy half-birthday to the first of your generation to have access to that retirement money.

The obvious response is to scream, "Don't tap into that money at such a young age!" But as with many financial issues, that knee-jerk response isn't necessarily correct.

You Can Look, but You Better Not Touch

If you are still healthy and working at 59-and-a-half, the odds are good you're going to see 89-and-a-half. So please, leave the money alone and keep saving. And unless you've saved an exorbitant amount of money already, you better keep punching your time card.

But let this half-birthday be a wake-up call to all you Baby Boomers: Your retirement is lingering, so make sure you're on the right savings track.

That's crucial since many surveys show that "Baby Boomers are expecting a higher standard of living than in their pre-retirement years," says Bob Carlson, editor of Retirement Watch, a newsletter in Oxon Hill, Md. That makes sense: Between cell phones and Blackberrys, many Americans feel like slaves to their jobs now, so why not hope to live like a king in retirement?