On the subject of retirement milestones, there’s not often one proper reply — particularly because the federal authorities could transfer targets or use variables that may be complicated.
Working example: A number of years in the past, the age at which many individuals are required to start out withdrawing cash from most forms of retirement accounts was bumped from the yr you flip 70½ to the yr you flip 72. Extra not too long ago, it was bumped once more — and now it’s not the identical age for everybody.
What follows is a listing of key ages for retirement planning — together with those for these required withdrawals — with particulars about who’s affected, and the way.
Age 50: Retirement account catch-up contributions
Everyone ought to steadily save for retirement. However the federal authorities tries to make it a bit of simpler on those that obtained a late begin by permitting “catch-up contributions.”
These are larger limits on the sum of money that folks 50 and older can put in retirement accounts every year.
For instance, for 2023, the base contribution restrict for many office retirement accounts is $22,500 and the catch-up contribution restrict is $7,500.
That signifies that somebody who’s 49 or youthful can put a complete of as much as $22,500 in a 401(okay) plan this yr. However somebody who’s 50 or older can put $22,500 plus an extra $7,500 — for a complete of $30,000 — in a 401(okay).
For extra particulars in regards to the present contribution limits for every type of retirement accounts, try “IRS Hikes Nearly All Retirement Account Thresholds for 2023.”
Age 55: HSA catch-up contributions
The IRS permits catch-up contributions with one other sort of account: well being financial savings accounts, or HSAs.
For 2023, these age 55 and older can contribute an additional $1,000 to their HSA every year, assuming they’re eligible for one in all these accounts.
Designed for individuals who have high-deductible medical health insurance plans, an HSA is a financial savings or funding account from which you’ll be able to reimburse your self for eligible medical bills.
HSAs are additionally tax-free, supplied that you simply comply with the IRS guidelines for them. As we element in “3 Ways a Health Savings Account Can Improve Your Finances“:
“Placing cash in a well being financial savings account is likely one of the only a few methods you’ll be able to fully keep away from paying any taxes in your cash — ever.”
Age 59½: Penalty-free retirement account withdrawals
Cash in your retirement accounts might be tapped early for functions apart from retirement, but it surely’s not a option to make frivolously. Early withdrawals from particular person retirement accounts (IRAs), for instance, generally are subject to a 10% tax penalty.
That penalty disappears at age 59½.
Age 60: Social Safety survivor’s advantages
Survivor’s benefits are a sort of Social Safety profit for relations of people that have died however have been receiving or have been eligible to obtain advantages on the time of their loss of life.
If you’re eligible for survivor’s advantages, you’ll be able to usually begin receiving them at age 60.
Age 62: Early Social Safety retirement advantages
For those who qualify for Social Safety retirement advantages based mostly by yourself earnings historical past, or that of a partner or ex-spouse, you can begin receiving these advantages when you flip 62.
Your profit can be lowered for claiming earlier than you attain what’s referred to as your full retirement age. However, some folks can justify claiming as early as age 62, as we cowl in “5 Times When It’s Smart to Claim Social Security Early.”
Age 64¾: Medicare enrollment
As you method age 65, don’t miss your preliminary enrollment interval for Medicare, the federal medical health insurance program that primarily serves people who find themselves not less than 65.
This one-time enrollment interval contains the month you flip 65, the three months earlier than and the three months after. In different phrases, it begins round age 64¾.
Failing to enroll on time can delay your Medicare advantages and end in hefty, everlasting monetary penalties, as we element in “4 Pitfalls for New Medicare Enrollees.”
However for those who’re already accumulating Social Safety advantages while you flip 65, the Medicare program will contact you routinely, so that you don’t want to fret about remembering to enroll.
Age 65: Medicare advantages
For those who join Medicare within the first three months of your preliminary enrollment interval, your Medicare advantages usually will start the month that you simply flip 65.
The Medicare program explains:
“For those who join Half A and/or Half B in the course of the first 3 months of your Preliminary Enrollment Interval, normally, your protection begins the primary day of your birthday month. Nevertheless, in case your birthday is on the primary day of the month, your protection begins the primary day of the prior month.
For those who enroll the month you flip 65 or over the last 3 months of your Preliminary Enrollment Interval, your protection begins the primary day of the month after you enroll.”
Age 66 to 67: Full retirement age for Social Safety
The quantity of your Social Safety profit relies partly on while you begin taking it. To get your full profit — which means an un-reduced profit — you have to attain your full retirement age earlier than claiming.
That age goal will depend on while you have been born. Right here’s a abstract from the Social Security Administration:
- For those who have been born in 1943-1954: Your full retirement age is 66
- 1955: 66 and a pair of months
- 1956: 66 and 4 months
- 1957: 66 and 6 months
- 1958: 66 and eight months
- 1959: 66 and 10 months
- 1960 and later: 67
Age 70: Most Social Safety profit
You can also wait till after your full retirement age to say Social Safety — till as late as age 70 — and obtain a completely larger profit in consequence.
As we clarify in “7 Reasons Not to Take Social Security at Age 62,” delaying till age 70 ends in receiving your most potential profit — greater than the profit you’d get at your full retirement age. For yearly you maintain off previous full retirement age, your profit will leap by as a lot as 8%.
Past age 70, there’s no additional profit improve potential.
Age 73-75: Required minimal distributions
Required minimal distributions (RMDs) are a minimal sum of money that you simply usually should withdraw from most forms of non-Roth retirement accounts every year, beginning the yr you attain a sure age.
Beforehand, that age was 72, however the recent Secure 2.0 Act modified the beginning age to 73. And for those who aren’t age 74 or older by the top of 2032, the beginning age is 75.
Age 73+: Certified charitable distributions
As soon as you’re taking your RMDs — at no matter age you occur to be — you’ll be able to rely charitable donations as a part of it, supplied you comply with the foundations. This is called a qualified charitable distribution (QCD), and it lets you exclude as much as $100,000 in gross earnings from taxes every year.