11 stages of retirement everyone should know

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When it comes to retirement milestones, there’s rarely just one right answer, especially since the federal government can move targets around or use variables that can be confusing.

Case in point: A few years ago, the age at which many people must start withdrawing money from most types of retirement accounts changed from the year you turn 70 and a half to the year where you turn 72. More recently it was pushed back again: and now it’s not the same age for everyone.

The following is a list of key ages for retirement planning – including those for required withdrawals – with details on who is affected and how.

50 years old: Catch-up contributions to retirement account

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Everyone should save for retirement on a regular basis. But the federal government is trying to make it a bit easier for those who started late by allowing “catch-up contributions.”

These are higher limits on the amount of money people age 50 and older can deposit into retirement accounts each year.

For example, for 2023, the base the contribution limit for most workplace retirement accounts is $22,500 and the catch up the contribution limit is $7,500.

That means someone 49 or younger can invest up to $22,500 in a 401(k) plan this year. But someone 50 or older can put $22,500 plus another $7,500 — for a total of $30,000 — in a 401(k).

For details on current contribution limits for all types of retirement accounts, see “IRS Raises Almost All Retirement Account Thresholds for 2023.”

55 years old: HSA catch-up contributions

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The IRS allows catch-up contributions with another type of account: Health Savings Accounts, or HSAs.

For 2023, people age 55 and older can contribute an additional $1,000 to their HSA each year, assuming they qualify for one of these accounts.

Designed for people who have high-deductible health insurance plans, an HSA is a savings or investment account from which you can reimburse yourself for eligible medical expenses.

HSAs are also tax exempt, provided you follow the IRS rules for them. As we detail in “3 Ways a Health Savings Account Can Improve Your Finances”:

“Putting money into a health savings account is one of the few ways to avoid paying taxes on your money altogether — ever.”

Age 59.5: Withdrawals without penalty from the retirement account

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Money in your retirement accounts can be tapped early for non-retirement purposes, but that’s not a choice to be made lightly. Early withdrawals from Individual Retirement Accounts (IRAs), for example, are generally subject to a 10% penalty tax.

This penalty disappears at 59 and a half.

Age 60: Social Security survivor benefits

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Survivor benefits are a type of Social Security benefit for family members of deceased persons who were receiving or were eligible to receive benefits at the time of their death.

If you qualify for survivor benefits, you can usually start receiving them at age 60.

62 years old: Early retirement from Social Security

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If you qualify for Social Security retirement benefits based on your own income history or that of a spouse or ex-spouse, you can begin receiving these benefits at age 62.

Your benefit will be reduced if you apply for it before reaching full retirement age. But, some people may justify claiming as early as age 62, as we cover in “5 Times When It’s Smart to Claim Social Security Early.”

64.5 years old: registration for health insurance

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As you approach 65, don’t miss your initial enrollment period in Medicare, the federal health insurance program that primarily serves people age 65 and older.

This one-time enrollment period includes the month you turn 65, the previous three months, and the following three months. In other words, it starts around the age of 64 and a half.

Failing to enroll on time can delay your Medicare benefits and lead to severe permanent financial penalties, as we detail in “4 Pitfalls for New Medicare Enrollees.”

But if you’re already collecting Social Security benefits when you turn 65, the Medicare program will contact you automatically, so you don’t have to worry about remembering to sign up.

65: health insurance benefits

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If you enroll in Medicare during the first three months of your initial enrollment period, your Medicare benefits will generally begin the month you turn 65.

The Medicare program explains:

“If you enroll in Part A and/or Part B during the first 3 months of your initial enrollment period, in most cases your coverage begins on the first day of the month of your birthday. However, if your birthday falls on the first day of the month, your coverage begins on the first day of the previous month.

If you enroll the month you turn 65 or during the last 3 months of your initial enrollment period, your coverage begins on the first day of the month after enrollment.

66 to 67 years old: full retirement age for social security

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The amount of your Social Security benefit depends in part on when you start taking it. To receive your full benefits, ie an unreduced benefit, you must reach full retirement age before applying.

This target age depends on your date of birth. Here is a summary from the Social Security Administration:

  • If you were born in 1943-1954: Your full retirement age is 66
  • 1955: 66 and 2 months
  • 1956: 66 and 4 months
  • 1957: 66 and 6 months
  • 1958: 66 and 8 months
  • 1959: 66 and 10 months
  • 1960 and after: 67

Age 70: Maximum Social Security benefit

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You can also wait until after your full retirement age to apply for social security – until age 70 – and receive a permanently higher benefit as a result.

As we explain in “7 Reasons Not to Take Social Security at 62,” delaying until age 70 results in receiving your maximum possible benefit – more than the benefit you would get at retirement age. at full rate. For each year you delay full retirement age, your benefits will increase by up to 8%.

Beyond the age of 70, there is no longer any increase in benefits possible.

Ages 73-75: Required Minimum Distributions

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Required Minimum Distributions (RMDs) are a minimum amount of money that you generally must withdraw from most types of non-Roth retirement accounts each year, starting in the year you reach a certain age.

Previously, this age was 72, but the recent Secure 2.0 law changed the starting age to 73. And if you are not 74 or older at the end of 2032, the starting age is 75.

Age 73 and over: eligible charitable distributions

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Once you take your RMDs – regardless of your age – you can count charitable donations as part of it, provided you follow the rules. This is called a qualified charitable distribution (QCD), and it allows you to exclude up to $100,000 of gross income from taxes each year.

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