All, Retirement Planning

Make the Most of Your Planning by Remembering These Key Ages

While your path to retirement is unique, there are certain ages that stand out for everyone. Keeping these key ages in mind will help ensure that you are able to make the most of your planning years and avoid penalties for not taking action on time.

Age 50 – Catch-Up Contributions

  • Beginning at age 50, the IRS allows you to make catch-up contributions of $6,500 per year to tax-deferred savings plans like a 457(b) or 401(k)
  • This is in addition to the $19,500/year regular contribution limit, meaning the total you can contribute is $26,000/year
  • You can also make catch-up contributions of an additional $1,000 to either a traditional or Roth IRA, for a total contribution of $7,000/year
  • Maximizing pre-tax contributions can help you avoid paying taxes now on money meant for retirement
  • Contribution limits can change each year and can be found on irs.gov

Age 59½ – No More Early Withdrawal Penalties

  • Once you’ve reached age 59½, most tax-deferred savings plans allow you to withdraw money without having to pay a 10% early withdrawal penalty
  • You’ll still have to pay ordinary income tax on any money you withdraw
  • Remember, the more you take out, the less your portfolio will earn in the future

Age 62 – Earliest Age You Can Start Social Security

  • The Social Security Administration allows you to claim your benefit as early as age 62 and one month
  • Just because you can, it doesn’t necessarily mean you should
  • The monthly paycheck you’ll get from Social Security goes up for each month you wait
  • See a month-by-month breakdown of how much your benefit will be reduced if you claim it before reaching your Full Retirement Age

Age 65 – Medicare Eligibility

  • Open enrollment for Medicare is:
    • The 3 months before your 65th birthday
    • The month of your 65th birthday
    • The 3 months after your 65th birthday
  • Missing the open enrollment period can mean higher costs for the rest of your life
  • AARP and the Medicare Rights Center have published resources to help you prepare
  • MERS partners with Mercer Marketplace 365 to provide you with access to a private retiree health care exchange

Age 66 – Full Retirement Age (But Just for Some of Us)

  • Your Full Retirement Age depends on when you were born.
  • Those born before 1954 will reach what the Social Security Administration defines as Full Retirement Age on their 66th birthday
  • If you wait until Full Retirement Age to start collecting, you’ll have a significantly higher paycheck
  • Find out your Full Retirement Age and how much your Social Security benefit increases with each month you wait to begin claiming it here
  • You can still get higher benefits if you wait until age 70

Age 70 – Latest Age You Should Claim Social Security Benefits

  • At age 70, if you haven’t started collecting Social Security yet, you should claim it now
  • This applies even if you’re still working Delaying beyond this age won’t get you a bigger monthly check
  • If you forget to claim at 70, you can get up to six months of retroactive checks

Age 72 – Required Minimum Distributions

  • The Required Minimum Distribution (RMD) is the minimum amount the IRS requires you to withdraw from your tax-deferred accounts every year starting at age 72 (or 70½ if age 70½ by 12/31/2019)
  • RMD rules can be tricky and if you don’t follow them, you will have to pay a stiff penalty
  • Penalty can equal up to 50% of the amount you should have withdrawn
  • MERS will alert you to any RMD on your MERS account(s)