Retirement Milestones: 9 Important Age Deadlines

Retirement is difficult to navigate—planning when to retire and making sure you’ll have enough money for this phase of life are just the tip of the mountain. Avoid penalties and meet key deadlines to maximize your retirement benefits. Here are milestones to add to your plan:

Age 50—Think you need to turn on the gas when it comes to your 401(k)? Employees, age 50 and older, can defer paying income taxes with catch-up contributions, up to $25,000. That’s $6,000 more than younger employees. For IRA-holders, you can defer taxes on $7,000—$1,000 more than your younger coworkers.

Age 55—If you leave your job the year you turn 55, you can begin taking draws—but only from the 401(k) associated with the company you most recently left. Good news? You can use the money for any reason and, drumroll please … no 10% tax penalty like you’d be assessed if you dipped into your money before turning 55! You will, however, have to pay income tax on any withdrawal. If you choose to roll the money into an IRA, your no-penalty draws won’t start until you turn 59 ½.

Age 59 ½—When you reach this age, you are no longer subject to the 10% penalty on your traditional 401(k) and IRA distributions. Again, you will be charged income tax on any withdrawal. By the way, now is a great time to meet with your financial advisor to discuss your disbursement strategy.

Age 62—Employees can start receiving Social Security at age 62. However, if you choose to start receiving these payments, they will be significantly smaller—up to 30% less than their maximum amount. If you continue working while receiving Social Security benefits at this age, part or all of your payments could be temporarily withheld.

Age 65—Sign up for Medicare benefits up to three months before your 65th birthday. If you don’t sign up on time (or within 8 months after leaving a job with group health coverage), your premiums could permanently increase. You may even be denied coverage.

Age 66—People born between 1943 and 1954 are eligible to collect full Social Security payments at age 66. Those born between 1955 and 1958 are eligible at age 66 and 2 months and those born in 1959 are eligible at age 66 and 10 months. Once the individual retirement age is reached, benefits are no longer withheld for those simultaneously working and collecting benefits.

Age 67—This is the age to receive full benefits for everyone born in 1960 or later.

Age 70—If you wait until age 70 to start collecting Social Security benefits, the payments will increase by about 8% per year. After age 70, there is no additional benefit to delay claiming your Social Security.

Age 70 ½—Once you hit this milestone, you are required to take distributions from traditional IRAs and 401(k)s. If you’re still employed, you can delay 401(k) distributions until April 1 of the year after you retire.

Want more info? Meet with a professional at Mountain America Credit Union for advice and recommendations to lead you to the retirement you want!