Table of Contents
Key Takeaways
- Age 50: Take advantage of higher contribution limits for retirement accounts, such as 401(k)s and IRAs, to maximize your savings potential.
- Age 55: If you retire or leave your job, you can make penalty-free withdrawals from your 401(k) or 403(b) without the early withdrawal penalty.
- Age 59 1/2: The early withdrawal penalty for retirement accounts is waived, but you still need to pay income tax on distributions.
- Age 62: You become eligible to start taking Social Security, but your benefits may be permanently reduced if you choose to start receiving them at this age.
- Age 65: Medicare eligibility begins, and it's important to sign up during the initial enrollment period to avoid premium increases and potential coverage denials.
How many retirement age milestones have you reached, and how many more are on the horizon? While there are many pieces to the retirement-planning puzzle — from collecting Social Security and signing up for Medicare to contributing to your retirement — these milestones could help you discover if you're on track to enter your golden years on your terms.
At Age 50
- 401(k)s and 403(b)s: You can save up to $30,500 — an additional $7,500 over the regular $23,000 limit — and defer taxes up to $30,500.
- Traditional or Roth IRAs: You can save up to $8,000 — an additional $1,000 over the normal $7,000 limit.
Based on 2024 limits1
At Age 55
- 401(k)s and 403(b)s: If you retire, quit or are laid off, you can take a withdrawal within the same calendar year without a 10 percent early withdrawal penalty.
At Age 59 1/2
- Retirement Accounts: The 10 percent early withdrawal penalty on distributions from retirement accounts — including 401(k)s, 403(b)s and IRAs — goes away once you reach this age. You will still need to pay income tax on withdrawals from qualified accounts.2
At Age 62
- Social Security: This is the earliest eligible age at which you can start taking Social Security.
- Early Retirement: Social Security benefits can be permanently reduced by up to 30 percent if you sign up at this age. If you bring in more than the annual earned income limit of $22,320 and collect Social Security benefits, you can temporarily lose some or all of your benefits.
At Age 65
- Medicare: Eligibility begins at this age, and you can sign up as early as three months before you reach age 65. Premiums for Medicare parts B and D can permanently increase and you could be denied supplemental coverage if you do not sign up during the initial enrollment period.
- Health Savings Accounts: You can withdraw from an HSA for nonmedical expenses without penalty. Distributions are still taxed like an IRA for nonqualified expenses.
At Age 66
- Social Security: If you were born between 1943 and 1954, you are eligible for full Social Security benefits.
- Delayed Retirement: If you postpone collecting Social Security benefits after reaching your full retirement age, your benefits will increase by 8 percent every year you delay until age 70.
At Age 67
- Social Security: If you were born in 1960 or later, you are eligible for full Social Security benefits.
At Age 72
- Traditional IRAs and 401(k)s: Account distributions are required after this age, and you must pay income tax on each withdrawal. The first distribution must be taken by April 1 of the year after you turn age 72. If you fail to withdraw the correct amount, you will be taxed a penalty of 50% of the amount you should have withdrawn.
Learn how you could prepare for retirement at any age milestone with Western & Southern.
Sources
- 401(k) limit increases to $23,000 for 2024, IRA limit rises to $7,000. https://www.irs.gov/newsroom/401k-limit-increases-to-23000-for-2024-ira-limit-rises-to-7000.
- Retirement topics: Exceptions to tax on early distributions. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-exceptions-to-tax-on-early-distributions.
