Significant Ages for Retirement Planning
Various rules regarding retirement benefits become effective at different ages. The key ages to keep in mind when planning for retirement include:
Age 50 — You are now eligible to make catch-up retirement plan contributions. In 2016, anyone 50 years or older can make an additional $1,000 catch-up contribution to an individual retirement account (IRA) and an additional $6,000 catch-up contribution to a 401(k) plan, if permitted by the plan.
Age 55— If you leave your company at or after this age, funds can be withdrawn from all qualified plans except IRAs without incurring the 10% federal income tax penalty.
Age 59½ — Funds can be withdrawn from all qualified plans, including IRAs, without paying the 10% tax penalty.
Age 60 — Widows and widowers are eligible for Social Security benefits.
Age 62 — You are eligible for reduced Social Security benefits. However, if you work, you’ll lose $1 of benefits for every $2 of earnings over $15,720 in 2016, until you attain full retirement age for Social Security purposes. Some defined-benefit pension plans may provide full benefits.
Age 65 — You are eligible for Medicare benefits. Most defined-benefit plans provide full pension benefits. If you were born after 1937, you will be eligible for full Social Security benefits sometime between age 65 and 67, depending on your year of birth.
Age 70 — If you postponed retirement past full retirement age to increase your Social Security benefits, you should start collecting at age 70, since there are no further benefit increases after this age.
Age 70½ — You must start taking minimum required distributions from traditional IRAs and other qualified plans. You are not required to take distributions from Roth IRAs. If you are still working, you do not have to take distributions from other qualified plans until you retire.