9 Money Milestones for Your 50s and Beyond

Every birthday is important in our book, but there are some key milestones to remember when planning for retirement. This age-by-age breakdown offers an overview of tax and financial planning tips for your 50s, 60s, and 70s to help you maximize retirement benefits and navigate deadlines.

Age 50 – Taxpayers aged 50 and older are eligible to contribute more to their retirement accounts. In 2023, employees can make 401(k) catch-up contributions of up to $7,500 (up from $6,500 in 2022) in addition to the standard contribution limit of $22,500 (up from $20,500 in 2022). This means that you can contribute a total of $30,000 to your 401(k) this year. If you hold an IRA or Roth IRA account, you can contribute an extra $1,000 over the $6,500 limit, for a maximum of $7,500.

Age 55 – If you leave your job during the year you turn 55 or after (age 50 for some public safety workers), you may be eligible to begin taking penalty-free withdrawals from your 401(k) or 403(b). However, withdrawals must be made from the qualified retirement account associated with your most recent company. You will be subject to income tax but will not incur the 10% tax penalty charge for withdrawing funds early. Be sure to verify the status of your plan provisions with your employer to determine if they offer this benefit. Rule of 55 withdrawal benefits vary among retirement plans.

Age 59 ½ – This age marks an important money milestone. At 59 ½, taxpayers may take withdrawals from any retirement account without having to pay a 10% penalty fee. This includes 401(k)s, 403(b)s, IRAs, and Roth IRA accounts. If you are employed and plan to continue working, you could use this age milestone as an opportunity to roll funds from your employer-sponsored plan into an IRA for greater diversification and more flexibility with beneficiaries, distributions, and ownership control. Be sure to check with your employer and investment advisor to determine if this strategy is right for you.

Age 60 – If you are a surviving spouse, you may begin collecting partial Social Security survivor benefits as early as age 60. Full benefits will not be available until full retirement age. Those with a disability can start collecting benefits as early as age 50. If you care for a minor child (under the age of 16) of the spouse who passed away, you are eligible to begin collecting survivor benefits at any age.

Age 62 – At age 62, you become eligible to file for Social Security or spousal benefits. Keep in mind, however, if you choose to draw on your benefits before you reach full retirement age (66 or 67, see below), you will receive approximately 30 percent less income than if you were to wait. Social Security benefits will also be subject to the earnings limit. In 2023, the earnings limit is $21,240. If you are under full retirement age, the Social Security Administration will deduct $1 from your benefits for every $2 that you earn above the annual limit.

Age 65 – During the month of your 65^th birthday, you qualify to receive Medicare, the federal health insurance program available to those 65 and older. Some taxpayers are automatically enrolled in Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) if they’re on disability or already in retirement receiving Social Security benefits. For those who are not, it’s recommended to manually sign up during the 7-month enrollment period, which is considered three months before you turn 65, the month you turn 65, and the three months after you turn 65. The timing is very important to avoid a lapse in insurance coverage and to prevent permanently increased premiums.

Age 66 or 67 – Depending on your birth year, the current full-benefit retirement age is 66 and 2 months for those born in 1955, and it will gradually rise to 67 for those born in 1960 and later. At this time, you can start receiving 100 percent of your Social Security benefits. However, delaying retirement can increase your monthly benefits and offer even greater income.

Age 70 – If you choose to delay retirement, your monthly benefit will increase 8% annually after your full retirement age. For example, if your retirement age is 67 and you delay retirement until 68, you’ll receive 108 percent of the monthly benefit; waiting until you’re 70 will provide 132 percent of the monthly benefit. After age 70, the increase maxes out, and there’s no additional benefit even if you continue to delay retirement.

Age 73 – Age 73 is a key milestone in retirement planning. The SECURE 2.0 Act of 2022 recently raised the required minimum distribution (RMD) age to 73 (up from 72 in the SECURE Act of 2019). Once you reach age 73, it’s necessary to start taking RMDs from your retirement accounts, including traditional IRAs and 401(k)s. If you’re still working, however, you may be eligible to delay the 401(k) or 403(b) distributions until April 1 of the year after you retire. Roth IRAs do not apply to the RMD rule at any age. Owners of Roth IRA accounts can pass down the money to their heirs, who would then need to follow a set of withdraw guidelines. Typically, beneficiaries will need to withdraw the entire amount within a 10-year timeframe. Starting on January 1, 2033, the SECURE 2.0 Act further increases the RMD age to 75.

Next Steps

As you plan for these key money milestones, be sure to consider tax implications at each stage. R&A can help you with tax advantaged strategies to best position you for the future. To learn more about these age-by-age financial markers, contact an R&A advisor for additional guidance.