Your age significantly affects how much money you'll have during your retirement years, and different retirement benefits have different eligibility ages. Over the course of 23 years, from age 49 to 72, you'll need a financial retirement plan that pays close attention to these age milestones so you don't miss out on financial opportunities or be subject to penalties.
49: Max Out Retirement Accounts
If you began saving for retirement early in your career, you're better poised to take advantage of compounding investment returns.
50: Make Catch-Up Contributions
Making catch-up contributions allows you to load your retirement accounts with additional money and qualify for a more significant tax deduction.i
55: 401(K) Withdrawals and the Rule of 55
If you reach the age of 55 while the current calendar year is ongoing and you quit your job or are separated from it, you become eligible to start withdrawing funds from your 401(k) without having to pay the penalty for early withdrawal.ii
59½: IRA and 401(K) Penalties End
The 10% early withdrawal penalty on IRA and 401(k) withdrawals end at 59½; however, you'll need to pay tax on the money put in and the associated growth earnings. iii
62: Eligible for Social Security Payments
If it's part of your financial retirement plan, you can start collecting your Social Security payments at age 62. However, your monthly payments could be reduced by 30% if you begin payments before your full retirement age of 67.iv And that reduction is permanent!
65: Time to Consider Medicare Coverage
You have seven months to enroll in Medicare, and that window opens three months prior to the month you turn 65.v This birthday's important because your Medicare Part B premiums will increase by 10% for each 12-month period you were eligible for benefits but didn't enroll.vi
66 – 67: Social Security Full Retirement Age
If you were born between 1943 and 1954, you qualify for retirement at age 66. If your birthday is after 1959, you'll have to wait one more year—until age 67. And no matter your age here, there's a built-in benefit if you wait on those payments.
70: Boost your Monthly Social Security Payments
Social Security payments increase by a certain percentage for each month you wait to start your payments between your full retirement age and age 70.vii Plus, if you're still working, the additional income could push you into a higher tax bracket. After age 70, there's no additional benefit to waiting.viii
72: 401(K) and IRA Required Minimum Distributions
If you have money in a retirement plan such as a 401(k) or traditional IRA, your first distribution must be taken by April 1 of the year after you turn 72 (73 if you reach age 72 after December 31, 2022). The excise tax for missing a required minimum distribution is a stiff 50% of the amount that should've been taken. But the SECURE 2.0 Act drops the excise tax rate to 25%, and possible 10% if the RMD is corrected within to years.ix
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[ii] https://smartasset.com/retirement/401k-55-rule
[iii] https://www.investopedia.com/ask/answers/101314/how-do-you-withdraw-money-your-401k.asp
[iv] https://www.ssa.gov/pubs/EN-05-10035.pdf
[v] https://www.medicare.gov/basics/get-started-with-medicare/sign-up/when-does-medicare-coverage-start
[vii] https://www.ssa.gov/benefits/retirement/planner/delayret.html
[ix] https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs
This document is for educational purposes only and should not be construed as legal or tax advice. One should consult a legal or tax professional regarding their own personal situation. Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products offered by an insurance company. They do not refer in any way to securities or investment advisory products. Insurance policy applications are vetted through an underwriting process set forth by the issuing insurance company. Some applications may not be accepted based upon adverse underwriting results. Death benefit payouts are based upon the claims paying ability ofthe issuing insurance company. The firm providing this document is not affiliated with the Social Security Administration or any other government entity.