Turning 50 or Older? Don't Miss These Critical Retirement Milestones

Here are the critical age-related deadlines you cannot miss while planning for an active and enjoyable retirement.

Feb 16, 2014 at 12:00PM

Most of us would love to enjoy a retirement that allows us to play golf, hang out on the beach, volunteer for worthy causes, spend time with our grandkids, travel to Europe, and do all types of other amazing activities.

But in order to maximize your ability to save on taxes, avoid government penalties and fees, and capitalize on benefits, you'll need to circle a few important dates on your calendar. Here are a few essential deadlines that you shouldn't miss while you're on the road to retirement.

Age 50
Workers age 50 and better can start making catch-up contributions to many retirement plans such as the 401(k), 403(b), and governmental 457(b). In 2014, a worker who is 50 or older can contribute a total of $23,000 into one of these plans, which is a whopping $5,500 above the limit that workers age 49 and under are eligible to save. Likewise, workers 50 and older can contribute an additional $1,000 into their individual retirement accounts, or IRAs, for a total contribution of $6,500 annually. Eligible workers can also make a $2,500 additional catch-up contribution to their SIMPLE IRA or SIMPLE 401(k). Capitalize on these growing limits so that you can maximize your tax deferrals or tax exemptions (depending on whether your accounts are structured as traditional or Roth accounts, respectively).

Furthermore, retiring police, medics, and firefighters can take penalty-free distributions from their plans starting at age 50 if they've completed at least 20 years of service. 

Age 55
This is the earliest age at which you can withdraw money from your 401(k) without paying the 10% early withdrawal penalty if you're no longer in that position and quit after reaching 55. But please note that you can only withdraw the funds from the 401(k) associated with your most recent employer. And you can't withdraw money from your IRA just yet.
Age 59-1/2
You can now withdraw money from your IRA without paying the 10% early withdrawal penalty. You can also withdraw money from any 401(k) account, rather than just the retirement account associated with the job you most recently left.
Age 62
Congratulations! You are now eligible to collect Social Security payments. But you may want to think twice before you take this step. If you begin collecting Social Security at this early age, your payments may be reduced by up to 30%. 

Age 65
You are now eligible for Medicare. In fact, you can sign up three months prior to your 65th birthday in order to get coverage that begins during the month you turn 65. This is an important deadline to keep on your calendar, because if you don't sign up right away, your Medicare Part B premiums might permanently increase, and it's possible that you may be denied supplemental coverage. Medicare Part B premiums will increase by 10% for every 12-month period that you don't sign up after you become Medicare-eligible. If you're covered by a group health care plan or by a military or veteran's health care plan, talk to your employer or your Department of Defense contact before you sign up for Medicare. 

In addition, historically, those who were born in 1937 or earlier were eligible to receive full Social Security benefits at age 65. Those born from 1938 to 1942 had their full retirement age rise to between 65 and 2 months to 65 and 10 months. But, as you'll see below, those reaching retirement age now have to wait a little longer.

Age 66
If you were born between 1943 to 1954, you're eligible to collect full Social Security payments when you turn 66. If you were born between 1955-1959, your full retirement age spans the range between 66 and 2 months to 66 and 10 months.  

Age 67
If you were born in 1960 or later, your Social Security full retirement age is 67. Remember, though, that your payments will increase by 8% per year every year that you delay collecting benefits until age 70. 
Age 70
This is the final year in which you can delay collecting Social Security benefits and still receive that 8% annual increase. If you delay collecting benefits past age 70, you won't collect any additional reward -- so you may as well start collecting the payments now. 

Age 70-1/2
You now must take mandatory distributions from your traditional IRA and 401(k). Talk to your tax advisor about how to calculate the correct amount. This is a critical question, because the tax penalty for failing to withdraw the correct amount is 50% of the amount that you should have withdrawn.  

So, happy (half)-birthday! You now must withdraw some of your hard-earned money. Enjoy it -- after all, you're only 70 once.

The No. 1 Way to Lose Your Wealth Without Even Knowing It
You’ve fought hard to build wealth for you and your family. Yet one all-too-common pitfall could completely derail your dreams before you even know it. That's why a company The Economist hails as "an ethical oasis" has isolated five simple questions you must answer to ensure that your financial future is really secure.

Can you answer YES to all five of these eye-opening questions?
Click here to find out -- before it’s too late!

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Paula Pant is a contributor to WiserAdvisor

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers