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 ends 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 possibly 10% if the RMD is corrected within to years.ix
Whether you’re heading into this span of important birthdays or are already in the thick of it, it’s important to factor these milestone ages into your financial retirement plan. Reach out to our team today at (540) 720-5656 to ensure you’re prepared for each birthday!
Sources:
- [i] https://www.investopedia.com/401k-catch-up-contributions-5499024#:~:text=Understanding%20Catch%2DUp%20Contributions&text=If%20you%20are%20age%2050,the%20time%20you%20reach%20retirement.
- [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
- [vi] https://www.medicare.gov/basics/costs/medicare-costs/avoid-penalties#:~:text=Part%20B%20late%20enrollment%20penalty,B%2C%20but%20didn’t.
- [vii] https://www.ssa.gov/benefits/retirement/planner/delayret.html
- [viii] https://blog.ssa.gov/are-you-age-70-or-older-and-not-yet-getting-your-social-security-retirement-benefits/
- [ix] https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs
Amy Anderson joined the ILG Financial team in 2023 as the client relations coordinator. Her responsibilities include scheduling of appointments, annual check-up notifications, and annuity and required minimum distribution assistance. She is a graduate of Harding University with a degree in Computer Information Systems. Amy and her husband have two children and she enjoys reading, crocheting, music and spending time with her family.
Chase Lopez joined the ILG Financial team in 2020 as an advisor. Chase is a 2016 James Madison University graduate with a degree in management. Chase has been trained under the tutelage of Dave Lopez, who is not only the founder and managing member of ILG Financial, but also is Chase’s uncle and godfather. He also enjoys working alongside his cousin, Megan, who is Dave’s daughter. Chase, as a fiduciary, believes in putting his clients interests first, and building out plans for his clients where they can have a happy and fruitful retirement. He married his beautiful wife in February 2022 and both use most of their free time chasing around their little pup, Aurora.
Jessica Carson joined the ILG Financial team in 2018 as an agent. Jessica and her husband have four children, two dogs, 3 barn cats, 5 chickens, and three parakeets. She indeed loves her children and pets! When not at work, Jessica enjoys playing the piano and cello as well as traveling and spending time outside with her family, hiking, fishing, and boating.
Terri Center joined the ILG Financial team in 2019 as client services manager. She handles client records, application processing, and gathering information to provide a professional and friendly experience with all of our clients. Terri is a graduate of Oakland University. She is married and has two children. She enjoys hiking, family time, and puzzle challenging video games. She also likes to share her creativity in her canvas paintings and sewing projects.
Megan Jones joined the ILG Financial team in 2020 as marketing director. Megan and her husband live in Fredericksburg, VA with their German Short Haired Pointer, Gus. Megan is a graduate of Longwood University and holds a degree in communications. Megan is the oldest of Dave Lopez’s three children and not only enjoys working alongside her father, but also with her cousin, Chase, who joined the ILG Financial team in 2020 as an advisor. When not at work, Megan enjoys sitting on the back porch with family and friends enjoying food and music.