People are living longer these days. And with higher life expectancies, today’s retirees will spend more time in retirement than any other generation in American history.
As such, retirements have evolved, and so have the guideposts that mark the way through your golden years.
As you near retirement, or if you’re already retired, there are key retirement milestones to keep in mind for accumulating and withdrawing the money you’ll need for your later years.
Certain birthdays are more important than others on the road to retirement, and they may arrive sooner than you think.
If you miss key deadlines, you could incur penalties. In addition, it’s critical to have a strategy for claiming Social Security at the right time to maximize your retirement income.
Here are some key ages to keep in mind in your retirement planning:
Milestone #1: Age 50 – Take Advantage of Catch-up Contributions
At age 50, you can add even more money to your retirement accounts. After age 50, current maximum annual contributions increase by $1,000 for an IRA and $7,500 for your Thrift Savings Plan (TSP). These are commonly called “catch-up contributions” and can make a meaningful difference in your retirement income.
Milestone #2: Age 59½ – Penalty-free Withdrawals from TSP or IRA
At age 59½, you’re first allowed to withdraw funds from a traditional IRA or your TSP without incurring penalties. If you take it out earlier, you’ll likely pay a 10% tax penalty. However, distributions of before tax contributions and earnings may be subject to income taxes.
Milestone #3: Ages 60-63 – Higher Catch-up Contributions
At ages 60-63, you can add even more money to your retirement accounts starting this year. As a result of the Secure 2.0 Act, employees who are turning 60, 61, 62, or 63 in 2025 can make a catch-up contribution of $11,250.
Milestone #4: Age 62 – Eligible for Social Security Benefits
At age 62, you are eligible to claim Social Security benefits. However, collecting your benefit this early will result in a lower monthly benefit than if you waited until full retirement age.
Milestone #5: Age 65 – Eligible for Medicare
At age 65, you should apply for Medicare — or you may have to pay a penalty if you’re not covered by another health plan. If you are collecting Social Security benefits, you are automatically enrolled in Medicare Part A. Otherwise, you have a seven-month period around your 65th birthday month to enroll. Consider whether you want any additional Medicare coverage during this period as well.
Milestone #6: Age 70 – No Additional Benefit to Wait Taking Social Security Payments
At age 70, Social Security claims delayed past full retirement age receive monthly credit that permanently increases the Social Security benefit. If you hold off until you hit 70 to start collecting Social Security, you usually see an 8% increase in your benefits for every year past your full retirement age. There’s no benefit to waiting until after 70 to start collecting Social Security.
Milestone #7: Age 73 – Required Minimum Distributions
At age 73, the Secure 2.0 Act requires you to start taking required minimum distributions (RMDs) from your TSP—by April 1 after the year you reach age 73. This is when you are required to take an annual withdrawal from your TSP or IRA whether you need the income or not.
Some things to note: If you are still employed, you are not required to take withdrawals from your TSP, since the TSP allows a “still working” exception. Required minimums are determined with tables from the IRS and must be calculated each year. The age for taking RMDs will increase to 75 in 2033.
Planning for Your Retirement Milestones
A lot of emphasis is put on planning and preparing for retirement, but these are important retirement milestones to keep in mind to help protect your assets and maximize your benefits.
Be sure to talk to a financial professional to learn more about how these age requirements may impact you and better prepare you for the milestones ahead.
If you’re ready to get serious about planning for your retirement from federal service, register to attend a workshop today!
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