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Although very commonly, people think of age 65 when they think retirement, this is not the first landmark age to be aware of when planning for yours.
Something which could be crucial in your retirement planning actually happens much sooner than this.
In today’s blog, we’re going to talk about the 7 Crucial Ages to know when planning for retirement in addition to why each of them might be important to you.
If you’ve thought about retirement planning before, and even if you haven’t, you may be making some type of contribution to a retirement-oriented account.
This could be an Individual Retirement Account (IRA), a Roth IRA, a 401k, or a 403b among others.
You may even be familiar with maximum contribution limits which tend to vary by year.
These contributions may compound over a number of years depending on your portfolio and can potentially benefit from tax-deferred growth in a traditional account or tax-free growth in a Roth account.
Where the potential to turbo charge these vehicles comes into play is the first key age to be aware of and that is age 50.
At age 50, you are able to make what are known as catch-up contributions.
These additional contributions are meant to help those on their journey to retirement put away more money, which could in turn bring you closer to your goal.
The amount of catch-up contribution varies based on the type of retirement account you are utilizing and the amounts can vary year-to-year as well.
The next key age is one that not many focus on, but we’ve personally seen be impactful on multiple occasions.
After what seems like, and very well may be, decades of saving in retirement accounts, we’re often asked when the money can be taken out.
There are many caveats that come into play when having this discussion, but for the purposes of this blog, we’re going to talk about withdrawals geared towards retirement spending.
Also often asked from those that have the fortune of being able to retire early is the question of how most efficiently to bridge the gap between retirement and collecting social security.
This brings me to the next key age which is 55 where one could explore “The Rule of 55”.
The rule of 55 is an IRS rule which allows penalty-free distributions from your workplace retirement account once you reach the age of 55, providing you’ve left your job.
This method is something we discuss with individuals who have made the decision to retire early or have left employment, prior to any additional forms of income in retirement becoming accessible.
The third key age in planning your retirement roadmap is a bit more well-known.
While the Rule of 55 may be a viable option and in the best interest of some, other retirement savers might wait a bit longer to start withdrawals from their accounts.
Similar to the Rule of 55, but with a bit more flexibility, is the 3rd key age, and that is 59 ½.
At 59 ½ you can withdraw any sum of money from your pre-tax retirement accounts, penalty free.
In addition, unlike the Rule of 55, that money can come from an Individual Retirement Account as opposed to a previous employer plan.
Something we often see is that predictability brings a sense of comfort to people, in general.
Although it is said, “Nothing in life is guaranteed but death and taxes”, predictability on something like a stream of income can helpful for the mentality of retirees.
This brings me to my 4th key age on the retirement planning journey which is 62.
Age 62 is the earliest age you can begin receiving Social Security.
Although you may receive a reduced amount in comparison to waiting longer, some opt to claim these benefits as soon as they become eligible.
In trying to come up with the best plan of action, remember that everyone’s situation is different, and working together with your financial advisor and accountant can help you obtain information to make an educated decision on when the best time to claim your benefit might be.
The 5th key age to be aware of is one which seems to be the most common in people’s minds.
One of the fundamental pieces to retirement planning is having a concrete understanding of your expenses and you may have heard that one of the largest expenses in retirement can be your medical expenses.
This factor can have many implications on one’s retirement planning journey, often including waiting until this key age which is 65.
At 65 Years old you become eligible for Medicare which for those of you that do not know, is a federal health insurance program.
There are a few caveats around Medicare that we are not going to discuss in this blog but would be happy to cover further with you.
The 6th key age to understand is related in a way to one of the landmarks we spoke about earlier.
You may be pleasantly surprised to hear that Social Security retirement benefits increase by a certain percentage each month you delay benefits past your full retirement age.
Your full retirement age depends on your date of birth, and you can find this information on your Social Security statement.
With that, there is a cap where benefit increases stop and that is at age 70.
If you can afford to wait until age 70 to claim your social security, you will be eligible for your highest benefit.
Although this may sound enticing, I would like to say that everyone’s situation is different and that you should speak with your team of advisors and accountants to develop a plan that is personalized for you.
The 7th crucial age to be aware of is one that you can navigate around through your retirement planning over time.
RMD or Required Minimum Distribution is the minimum amount of money you must withdraw from your tax-deferred retirement accounts each year, after you hit a certain age.
As it stands in 2025, the RMD age is 73. It is important to understand this rule and speak with your financial professional and accountant once you hit this age as there could be penalties if you do not withdraw from your pre-tax retirement starting at this age.
The Final Word:
Everyone’s situation is different but we hope this outline shines some light on the different retirement ages to be aware of on your journey. Of course, we are here to answer any questions.
Thanks for reading!
- The Rockline Team
Disclaimer:
Rockline Wealth Management (RWM) is a registered investment adviser located in Islip Terrace, NY. RWM is registered with the U.S. Securities and Exchange Commission. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission.
Rockline Wealth Management does not offer tax or legal services. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation.
All investment strategies have the potential for profit or loss. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client's investment portfolio.
Asset allocation and diversification do not ensure or guarantee better performance and cannot eliminate the risk of investment losses. The opinions expressed and material provided are for general information, and should not be considered a solicitation of financial advice or for the purchase or sale of any security.
Real-life and fictional examples given in this video should not be viewed as guaranteed outcomes when investing. Past performance is not indicative of future results and every individual’s investment circumstances are different. Individuals should consult their financial professional before implementing their investment plan.