Each type of retirement benefit has a different eligibility age. Your age plays a significant role in how much you can expect to receive from Social Security and what you need to do to avoid retirement account penalties.
Key Milestones for Retirement:
- 49 — Max out retirement accounts: Workers who begin to save for retirement early in their careers are best able to take advantage of compounding investment returns.
- 50 — Take advantage of catch-up contributions: Making catch-up contributions allows older workers to tuck additional money into retirement accounts and qualify for a more significant tax deduction in the years leading up to retirement.
- 55 — Your 401(k) withdrawal age: The rule of 55 allows you to avoid the 10% early withdrawal penalty, but income tax will still apply to each traditional 401(k) distribution.
- 59½ — The IRA retirement age: The 10% early withdrawal penalty on IRA distributions ends at age 59½; however, income tax is due on each withdrawal from your traditional IRA.
- 62 —Eligible to begin Social Security payments: You can start collecting your Social Security payments at age 62. However, monthly payments are reduced if you begin payments before your full retirement age.
- 65 — Medicare eligibility begins: You can first enroll in Medicare during a seven-month period beginning three months before the month you turn 65. Take care to sign up on time because your Medicare Part B premiums will increase by 10% for each 12-month period you were eligible for benefits but didn’t enroll.
- 66 — Baby Boomer’s Social Security full retirement age: Some Boomers qualify at age 66, while others have to wait a bit longer, so it’s essential to know your age number. Also, once you turn your full retirement age, you can work while receiving Social Security benefits without having any of your payments withheld.
- 67 — The Social Security full-retirement-age for younger generations: Generation X, Millennials, and younger workers born in 1960 or later need to wait until age 67 to qualify for their full Social Security benefit.
- 70 — Age to boost your monthly Social Security payments: Social Security payments increase by 8% for each year you wait to start your payments between your full retirement age and age 70. After age 70, there’s no additional benefit to waiting.
- 72 — The 401(k) and IRA required minimum distribution: Your first distribution must be taken by April 1 of the year after you turn 72. The penalty for missing a required minimum distribution is a stiff 50% of the amount that should’ve been taken.
Remember to factor these important ages into your retirement plan. If you’re working with a reliable financial professional, reaching these milestone numbers should already be part of your retirement plan. If you feel you’re missing a few numbers, give us a call at (603) 261-3736.
Bob has a passion for making your money work hard for you. He takes profound joy in ironing out a plan for a long and comfortable retirement, no matter what your current income or level of wealth. With a work ethic second to none, he has a zeal for transforming uncertainty into stable ways for you to protect your future and your family. He knows that the quality of your life you enjoy today can remain as rewarding—or even better—after retirement.
With a strong background in information technology, Carol is instrumental in building operational policies and strategies that keep the organization functioning smoothly. Carol’s organizational skills and her flexibility to jump from priority to priority along with her commitment to customer service makes her an essential part of the Grimard Financial team. When Carol is not working with the Grimard Financial Family, she is a very creative and accomplished photographer.