5 Important Retirement Ages to Remember

5 Important Retirement Ages to Remember

When it comes to retirement, people tend to remember one specific age: 65. Why? Well, for years, 65 was the standard retirement age. However, the road to retirement is in fact studded with several important ages to keep in mind. 

Being aware of specific ages can help you save money, maximize your tax strategies and take advantage of important benefits.

As a financial advisor in Santa Rosa, CA, I wanted to share 5 important ages that are often overlooked, yet carry a lot of weight.



50: When You Can Start to Make Catch-Up Contributions

The Internal Revenue Service (IRS) gives multiple benefits to pre-retirees. A significant one is the ability to make catch-up contributions to your tax-advantaged retirement accounts starting at the age of 50. 

Contributions to pre-tax defined contribution plans, like a 401(k), are currently capped at $19,500 per year. But when you hit age 50, you can start contributing an additional $6,500 each year, for a total of $26,000 annually.

Similarly, Individual Retirement Account (IRA) contributions are currently capped at $6,000 per year, and are tax-deductible for traditional accounts. When you reach 50, you can contribute an additional $1,000 each year, for a total of $7,000.

 Catch-up contributions can exponentially increase your retirement nest egg while providing tax advantages, especially if you got a late start to your retirement planning process.

55: When You Can Make a Withdrawal Without Penalty

The second milestone age on the road to retirement is 55. This is the age that you can withdraw money from your current 401(k) plan without penalty if you are laid-off, fired or quit your job. 

The standard age at which investors can withdraw money from all retirement accounts is 59-½. Generally, if you try to withdraw retirement fund money before that, the IRS will levy a 10 percent penalty. In addition, withdrawals from traditional retirement accounts are taxed at your current ordinary rate.

 However, the IRS Rule of 55 allows penalty-free 401(k) withdrawals starting at age 55. (At age 59-½, you can withdraw funds for any reason.)

Note that the Rule of 55 only applies to your current 401(k) funds. If you have 401(k) funds at previous companies, the Rule of 55 doesn’t cover them. 

You can, however, roll over previous funds to your current employer (if the plan allows), so that if you want to utilize the Rule of 55 when the time comes, you can.

The Rule of 55 applies to all defined contribution plans, including 403(b)s. It does not, however, apply to other types of retirement plans, such as IRAs.


Don’t guess when it comes to your retirement planning. Schedule a no-strings-attached conversation with the Montgomery Taylor Wealth Management team.


62: When You Can Start to Claim Social Security Benefits – But You Don’t Have To!

It’s true: You can start collecting Social Security benefits at age 62. However, your monthly payments will be less than the full amount you’re eligible for unless you wait until you reach your full retirement age. 

Your full retirement age is the point at which you are eligible for your full benefits, an age determined by your birth year. If you were born in 1960 or later, for instance, your full retirement age is 67.

It’s important to know your individual full retirement age, because it will affect the amount of Social Security benefits you actually receive. Your benefits can be reduced up to 30 percent for taking them early. Conversely, your benefit amount will increase by 8 percent every year you delay taking benefits between your full retirement age and the age of 70.

For instance, let’s say that you are eligible for $2,000 per month at your full retirement age of 67. If you were to take your benefits at age 62, they would fall to $1,400 per month. Whereas if you were to wait until the age of 70, your benefit would increase to $2,480 per month.

While it may make financial sense to wait, determining the right age to take Social Security can be tricky. Factors such as life expectancy and even your family makeup should be considered. 

Both reductions and increases in your benefit amount are permanent. 

Discuss your specific situation with a financial advisor to figure out the most advantageous time for you.

65: When You Become Eligible for Medicare

Medicare is the government program providing health insurance to older Americans. Because insurance can be tied to employment, and older people often have more healthcare issues than younger folks, Medicare eligibility can be an important benefit to check into as you plan for retirement.

In general, you become eligible for Medicare at the age of 65. Although many people link Social Security and Medicare together, you can enroll in Medicare before you choose to take Social Security benefits. 

Medicare comes in different parts, and unlike popular belief, it’s not free! 

There tends to be a lot of confusion surrounding retiree healthcare. Read our recent blog post: Sonoma County Wealth Advisor Weighs in on Healthcare in Retirement. 

72: When You Have to Start Taking RMDs

 Think all relevant retirement dates are in your 50s and 60s? Think again! There’s another important one that takes place in your early 70s.

Age 72 is when you must take Requirement Minimum Distributions (RMDs) from your tax-advantaged retirement plans. RMDs equal a certain portion of your retirement plan assets and are intended to be taken annually based on life expectancy data. 

If you don’t take RMDs when the IRS requires you to, you could face steep tax penalties – up to 50 percent of the required amount.

 Specifically, the first RMD is due April 1 of the year in which you turn 72. In subsequent years, they are due on December 31. 

(Make note: If you were born before July 1, 1949, you had to start taking RMDs at age 70-½.)

Don’t Forget!

Keeping track of important retirement ages can be challenging, but as you can see, missing certain milestones can result in lost benefits and added penalties. 

For individualized help with your specific situation, consult with a financial advisor. If you’re looking for a financial advisor in Santa Rosa, CA or the greater Sonoma County area, let’s talk! Montgomery Taylor Wealth Management is a Santa Rosa-based firm serving the greater Sonoma County area. (A Sonoma County retirement has unique aspects to consider.) Our team of financial advisors, certified public accountants and estate planning attorneys provide integrated, comprehensive financial advice so you can simplify your life and maximize your opportunities.

Get a conversation started.


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