Critical ages for retirement planning: Social Security benefits and more

Age 50: catch-up contributions

For many qualified retirement plans—403(b)s, 401(k)s, and governmental 457(b)s—you’re allowed a catch-up contribution after reaching age 50. That means you can save an additional $6,500 in your retirement plan, for a total of $27,000 (instead of the $20,500 allowed for those younger than 50).

You can also save more in your individual retirement accounts (IRAs). Instead of saving up to the $6,000 annual limit in your IRA for those under age 50, you can now save up to $7,000.

Catch-up contribution amounts get adjusted periodically for cost-of-living increases.

Age 55: the rule of 55

Generally, you may not take your money out of your retirement plan without paying taxes or penalties before you turn 59½. One exception is known as the rule of 55, which states that if you leave your employer in the year you turn 55 (or later), you may withdraw from your employer’s retirement plan without the 10% penalty.

For certain public safety employees, this rule starts at age 50, not 55. This rule of 55 exception doesn’t apply to IRAs for these employees.

Age 59½: penalty-free withdrawals

Once you turn 59½, you’re not subject to the 10% early withdrawal penalty for your qualified plans or IRAs. You aren’t required to take your money after attaining age 59½, but you can withdraw without penalty if you need to.

Ages 60–70: Social Security full retirement age and Medicare

Your 60s are jam-packed with important dates for Social Security and Medicare benefits.

An important milestone to be aware of is your full retirement age, as it figures into some actions you might take before you actually reach full retirement age.

Your Social Security full retirement age is when you’re entitled to 100% of your benefit. You’ll reach full retirement age between 66 and 67, depending on the year you were born.

Refer to the prior year to determine your full retirement age if you were born on January 1 (e.g., if you were born on January 1, 1956, your full retirement age is 66 and 2 months).

Age 62: Social Security and early retirement

You’re eligible to start receiving Social Security benefit payments at age 62. But because you’re younger than your full retirement age, as defined by the U.S. Social Security Administration—with a longer life expectancy—your benefit is reduced. 

How much will your payments go down if you retire early? That depends on when you start taking them compared with your full retirement age. 

If your full retirement age is 67 and you start receiving payments at age 62, your benefit is 30% less than if you start withdrawals at 67. If you started one year later, at age 63, you’d get 25% less—the closer you get to full retirement age, the less your benefits will drop.

Age 65: Medicare eligibility

Your initial enrollment period for Medicare starts three months before and ends three months after the month you reach age 65. Penalties may apply if you don’t sign up during this seven-month window. 

Do you still receive medical insurance through work? If yes, you may still want to consider signing up for Part A to avoid penalties; there’s typically no premium, and your coverage will supplement your work policy. Consult with your employer and insurance provider as you approach age 65 to understand what works best for you.

Ages 66–67: full retirement age

Depending on when you were born, you’re entitled to 100% of your Social Security benefit between ages 66 and 67.

Age 70: maximum Social Security benefit

Delaying the start of your Social Security payments beyond your full retirement age increases your benefit. You’ll maximize your payments at age 70—beyond this point, your benefits won’t grow further. If your full retirement age is 66, your monthly payments will be 32% higher if you wait until age 70 to claim your benefit.

This increase is permanent—it applies to all future payments. So if you’re still working or can pay for your early retirement years from other sources, delaying payments can be a beneficial strategy.

Here’s how your monthly benefits can be affected by when you start payments if we assume your monthly benefit is $1,000 at a full retirement age of 67.

Age 72: required minimum distributions

The IRS generally requires you to take a minimum amount from your retirement accounts starting at age 72, which are called required minimum distributions (RMDs). You must take your first RMD by April 1 of the year following the year you turn 72.

RMDs apply to certain tax-deferred retirement accounts, including, but not limited to:

• Profit-sharing and 401(k) plans
• 403(b) plans
• 457(b) plans
• Traditional IRAs

There are a couple of exceptions to RMDs:

• Roth IRAs that you’re the original owner of aren’t subject to RMDs
• If you’re still working and don’t own more than 5% of the business, if the plan allows for it, you can delay your RMD until the year you retire, whichever age you may be

If you don’t take the correct amount—before the deadline—you can be subject to a substantial penalty: 50% of the undistributed amount.

Know your age-related retirement milestones

Check your retirement plan’s summary plan description or plan highlights document to make sure your plan allows for certain age-related milestones, such as catch-up contributions and early withdrawals. 

You have a lot to think about as you approach retirement—paying down debt, shifting investments around, maximizing savings, and refining your retirement strategy overall. Know these key dates to help you prepare and get the most out of your retirement benefits. And be on the lookout for potential changes to catch-up contributions, RMDs, and more from the SECURE Act 2.0, building on the Setting Every Community Up for Retirement Enhancement Act (SECURE Act) of 2019.