Whether or not you’ve stopped counting birthdays, it’s important to know that some birthdays are more important than others when it comes to financial planning.
Milestone birthdays can remind you to consider your options and discuss key decisions with a financial professional.
- 50: You can contribute more to your retirement plan.
When you turn 50, you can contribute more to your 401(k) or another retirement plan. In 2022, the maximum contribution limit is $20,500 with an additional $6,500 catch-up contribution allowed for those turning age 50 or older.1 For IRAs, the 2022 contribution limit is $6,000 ($7,000 if you’re over 50).2
- 59 ½: No penalty if you withdraw funds from your IRA.
Starting at age 59½, you can take withdrawals without penalties, although it’s worth noting that taxes may be due based on the type of your IRA. At this age, consider talking to your financial professional about creating a retirement income plan. It can also be a good time to consider consolidating old 401(k)s from previous employers and IRAs. Doing so can make it easier to track and organize your investments, e.g. manage your asset allocation, diversification, and rebalancing. Plus, it may help reduce taxes and fees.3
- 62: You can start receiving Social Security.
At 62, you’re able to start receiving Social Security income. However, doing so can reduce your monthly benefits by 30% versus waiting until your Social Security full retirement age (FRA—the age when you are entitled to 100 percent of your Social Security benefits, which are determined by your lifetime earnings). And that reduction is permanent.4 Therefore, talk to a financial professional to help you with this decision. Visit the Social Security website to get personalized retirement estimates.
- 65: You can sign up for Medicare.
You’ll want to get the timing right on this. Medicare’s initial enrollment period lasts seven months, starting 3 months before you turn 65, and ending 3 months after the month you turn 65. If you miss your 7-month Initial Enrollment Period, you may have to wait to sign up and pay a monthly late-enrollment penalty.5
- 66: Full Retirement Age for people born 1943–1954;
67 for people born after 1960
Full Retirement Age is the age when you are entitled to 100% of your Social Security benefits, which are determined by your lifetime earnings. The amount you receive when you first get benefits sets the base for the amount you will receive for the rest of your life. If you were born between 1955 and 1959, the full retirement age gradually increases.6 If you were born after 1960, your full retirement age will be 67.6 You can increase your retirement benefits by waiting past your Full Retirement Age to retire. Each month you put off filing up to age 70 earns you delayed retirement credits that boost your eventual benefit.6
- 70: Social Security benefit increases as a result of delaying retirement stop at age 70
You don’t have to begin collecting Social Security by age 70, but your benefit will not increase if you delay claiming past your 70th birthday.6
- 70 ½ or 72: RMDs begin
Required Minimum Distributions (RMDs) generally are minimum amounts that a retirement plan account owner must withdraw annually starting with the year that you turn 72 (70 ½ if you reach 70 ½ before January 1, 2020).7 The requirement allows the government to finally tax the money, which had been growing tax-deferred to encourage saving for retirement. Investors who fail to take an RMD may face a steep penalty, equal to half the amount they didn’t withdraw.7
- 73 and beyond
According to the MIT AgeLab, a division of MIT that studies aging, retirement tends to get more complex as we age. Things you’ll likely need to address include, housing decisions, driving challenges, maintaining friendships, caregiving, organizing your most important info, and having fun and a purpose.
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. This material was prepared by LPL Financial, LLC. Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL affiliate, please note LPL makes no representation with respect to such entity. Securities and insurance offered through LPL or its affiliates are:
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1IRS announces changes to retirement plans for 2022, IRS, 11/17/21
2Retirement Topics – IRA Contribution Limits, IRS, 2021
3Consult a financial professional or tax professional for more information.
4Should you take Social Security at 62? Fidelity, 7/1/21
5When does Medicare coverage start? Medicare.gov, 2021
6Retirement Benefits, Social Security, 2021
7Retirement Plan and IRA Required Minimum Distributions FAQs, IRA, 2021