By Kyle Plotkin
Investment Advisor Representative
[email protected]
We celebrated Jaime’s birthday this week here in the office. And while his next birthday is a significant one, he isn’t particularly thrilled to celebrate it. When you’re young, every birthday seems significant. Ten is big, 13 you’re a teenager, 16 you can drive, 18 you’re an “adult”, 21 you can drink… But that’s about it for birthdays you’re looking forward to. From there on—up to, including, and past the one Jaime is dreading—birthdays are milestones we liked better when they were ahead of us.
Retirement is full of milestone birthdays. You reach X age, you can do Y. What are the pairings? Read on.
Age 50
- You are able to make catch-up contributions to your retirement accounts.
- For employer-sponsored plans like 401(k)s, 403(b)s, 457, and TSPs, you can contribute $8,000 on top of the $24,500 everyone else can contribute for a total of $32,500.
- For IRAs, traditional and Roth, you can contribute another $1,100 on top of the $7,500 limit everyone else faces, for a total of $8,600. Remember, Roth contributions will phase out as your income reaches certain levels.
- If you are a widow/widower and disabled, you are eligible for Social Security survivor’s benefits.
Age 59 ½
- You are now eligible to take in-service distributions from employer plans (e.g., rolling a 401(k) to an IRA for more flexibility and investment options).
- You may also take penalty-free withdrawals from IRAs (10% early withdrawal penalty no longer applies).
Age 60
- If you are a widow/widower and do not have a permanent disability, you are eligible for Social Security survivor’s benefits.
Age 62
- The earliest age you may claim Social Security, so long as you have 40 working quarters to your name. Filing for Social Security this early, however, subjects your distributions to a heavy lifelong penalty. As much as 30%.
Ages 60-63
- Those between the ages of 60-63 can make an extra $3,250 catch-up to their employer-sponsored retirement accounts on top of the regular catch-up allowed to those aged 50 or higher, for a total of $35,750 a year.
Age 65
- Medicare eligibility begins. While you are not required to file for Medicare at this age, your insurer may require you to do so, and failure to file in a timely manner will subject you to temporary penalties for Part A and permanent penalties for Parts B and D.
- Those who file their taxes with the standard deduction receive an additional $1,650 to their standard deduction if they’re married or $2,050 if they are single, filing separately, or head of household.
- Those who file their taxes with the standard deduction receive an additional $6,000 to their standard deduction on top of the deduction mentioned in the previous bullet point, but only if they are filing single, married filing jointly, or head of household. This provision is part of the One Big Beautiful Bill Act, is subject to an income-based phase out, and is set to expire in 2028.
Ages 66-67
- Depending on your birth year, Social Security’s full retirement age (FRA) is somewhere between ages 66 and 67 for you. Full retirement age is the filing age in which you will receive 100% of your Social Security benefit (if you file earlier, the penalty doesn’t go away when you reach FRA).
- If you were born in 1959, your FRA is 66 years and 10 months, which would have been sometime late last year or this year.
- If you were born in 1960 or later, your FRA is 67.
Age 70
- This is the last filing age for Social Security. Those who wait until after FRA to file for Social Security receive a bonus to their benefit. At 70, the bonus stops calculating and those who file at 70 receive 124% of their Social Security benefit each month.
Age 70 ½
- You are eligible to make Qualified Charitable Deductions (QCDs) from your IRAs to a qualified charity, tax-free.
Age 73
- Required Minimum Distributions (RMDs) begin for those turning 73 from now until 2032. RMDs are mandatory withdrawals from traditional IRAs and traditional employer-sponsored retirement accounts.
- If you are still working at age 73 and contributing to an employer-sponsored retirement account, that account does not require an RMD so long as you are employed. Your other traditional accounts will.
Age 75
- Required Minimum Distributions begin for those turning 75 in 2033.
Any questions? Let us know.