Seven Age Milestones That Will Impact Your Retirement Planning

If you’ve not been able to save as much as you wanted due to other financial priorities, this is a great opportunity to catch up on your retirement saving. At age 50, you’re eligible to make “catch-up” contributions to 401(k)s and other employer-sponsored retirement plans. The Internal Revenue Service (IRS) “catch-up” contribution limits are adjusted annually. For 2021, the IRS allows you to contribute an additional $6,500 to your workplace retirement plan over the annual contribution limit of $19,500.

Once you reach age 59½, withdrawals from employer-sponsored retirement plans are no longer subject to the additional 10% federal penalty tax on early withdrawals — though you still may owe regular income tax on the distributions. But it’s generally better to leave your tax-advantaged retirement savings alone until you plan to begin taking distributions during retirement.

Age 62 is the minimum age at which you can choose to begin receiving Social Security benefits. Many people choose to take benefits early, for a variety of reasons. However, the math is pretty clear: claiming earlier gives you a reduced benefit and claiming later gives you an increased benefit. For each year you postpone taking this benefit (until age 70), your monthly check will be larger. Check out the Social Security Benefits Planner for more comprehensive information, including calculators and other resources.

If you’re already receiving Social Security, you’re automatically enrolled in both Parts A and B of Medicare. But if you aren’t yet receiving Social Security, you will need to apply for Medicare during one of the designated annual enrollment periods. Keep in mind that you may be eligible for Medicare coverage at 65, but your full retirement age for Social Security may be later. Your initial Medicare enrollment period lasts for seven months, beginning three months before the month in which you turn 65. Missing your enrollment date may mean penalties or even higher premiums for the rest of your life. Check out medicare.gov for comprehensive information (you can also sign up to get regular email alerts and updates).

Your “full retirement age” for Social Security benefits is the age at which you may first become entitled to full or unreduced retirement benefits. If you were born between 1943 and 1954, age 66 is your full retirement age. For those born after 1954, the full retirement age will increase by two months a year until the current maximum of age 67 for those born in 1960 and later.