The ages of retirement: Key milestones you need to know
Retirement is often seen as a final destination, but in reality, it’s more like a journey—a collection of milestones that evolve over the course of your life.
Each of these “ages of retirement” brings new opportunities, restrictions, and benefits, some of which start while you’re still working.
Understanding these key ages will help you plan for your future and make better decisions along the way.
Age 50: Time to catch up on contributions
As you approach your 50s, you gain the ability to make catch-up contributions to your retirement accounts. This means you can contribute more to plans like your 401(k) and IRA, boosting your savings for the future. In 2024, workers under 50 can contribute up to $23,000 to a 401(k), but if you’re 50 or older, you can add an extra $7,500, bringing the total to $30,500.
Similarly, catch-up contributions are available for IRAs. This flexibility helps you accelerate your retirement savings as you get closer to retirement. Moreover, starting in 2025, workers aged 60 through 63 will be allowed to contribute even more.
Ages 50–60: Work benefits and stock vesting
During your 50s and 60s, you may become eligible for various retiree benefits from your employer. It’s important to review your company’s policies to see what benefits you can expect when you retire.
This includes stock-vesting provisions, pension options, and healthcare benefits.
Age 55: Early retirement withdrawal flexibility
One of the key ages of retirement is 55, especially if you’re considering early retirement. If you leave your job during or after the year you turn 55, you can withdraw funds from your 401(k) or 403(b) without facing the usual 10% early withdrawal penalty. This is a huge advantage if you plan to retire before the traditional retirement age. For public safety employees, the age for this exemption is even lower—just 50.
In addition, if you’re over 55, you can also start making catch-up contributions to your Health Savings Account (HSA).
Age 59 ½: No more early withdrawal penalty
At age 59 ½, the early withdrawal penalty is lifted for most retirement accounts like IRAs and 401(k)s.
This is a pivotal moment for many, as it allows you to start tapping into your retirement savings without incurring the 10% penalty.
However, just because you can access these funds doesn’t mean you should. It’s important to strategize your withdrawals to avoid pushing yourself into a higher tax bracket when your Required Minimum Distributions (RMDs) begin at age 73.
Age 62: Early Social Security benefits
Age 62 is a significant milestone because it’s when you become eligible for early Social Security benefits.
You can start taking Social Security at this age, but keep in mind that the longer you wait, the higher your monthly benefit will be.
Some retirees opt to take benefits early if they need the income right away, while others wait until their full retirement age (FRA) to maximize their monthly payments.
Age 65: Medicare and health savings accounts
Once you turn 65, you become eligible for Medicare, the federal health insurance program. However, it’s important to be aware of enrollment periods to avoid late-enrollment penalties.
If you continue working past 65, you might be able to delay Medicare enrollment without penalties, but if you have retiree health insurance, you need to make sure you enroll on time to avoid gaps in coverage.
At 65, you also become eligible to use your HSA funds for non-medical expenses without the 20% penalty. However, you’ll still pay regular income tax on these withdrawals.
Ages 66–67: Full retirement age for Social Security
Between ages 66 and 67, depending on the year you were born, you will reach your Full Retirement Age (FRA) for Social Security.
At this point, you can start claiming Social Security benefits at the full amount you are entitled to, rather than taking a reduced amount for early retirement.
Additionally, if you delay taking benefits until after your FRA, your benefit will increase by 8% per year until you reach age 70.
Age 70: Maximum Social Security Benefits
At age 70, your Social Security benefits reach their maximum value. After this age, there is no incentive to delay claiming benefits any further, as they will not increase.
If you’ve waited this long, it’s likely the best time to start collecting your Social Security benefits.
Age 73: Required Minimum Distributions (RMDs)
At age 73, the IRS requires you to start taking Required Minimum Distributions (RMDs) from most retirement accounts, including 401(k)s and IRAs. RMDs are calculated based on your account balance and life expectancy.
Failing to take these distributions could result in a hefty penalty, so it’s important to stay on top of these requirements.
The ages of retirement are not just about stopping work—they represent a series of important milestones that affect how you save, spend, and access your retirement funds.
By understanding these key ages, you can make better decisions, optimize your benefits, and avoid costly mistakes.
