Nine Important Retirement Milestones (Starting at Age 50)
I’m continuing the topic of properly preparing for retirement this month. Most people don’t really start thinking about retirement at age 50, but there are a few things you should be doing to set yourself up early for a comfortable and secure retirement.
Age 50: Catch-Up Contributions Begin
At age 50, you can start making “catch-up” contributions to your retirement accounts. This means you can put extra money into your 401(k), 403(b), or IRA each year. For example, in 2025, people aged 50 or older can contribute an extra $7,500 to their 401(k) on top of the regular limit, and an extra $1,000 to their IRA. This helps you boost your savings if you started late or want to save more before retiring.
Age 55: HSA Catch-up Contributions
If you are eligible for a Health Savings Account, you may begin making additional catch-up contributions at age 55.
Age 59½: Access to Retirement Funds
Once you reach 59½, you can take money out of your IRA or workplace retirement plans without the 10 percent penalty. You will still owe regular income taxes on most withdrawals, but this age gives you more flexibility to use your savings as needed. I don’t recommend it, but it’s available if you need it.
Ages 60-63: Extra Catch-Up Contributions
Starting in 2025, people aged 60 to 63 will be able to make even larger catch-up contributions to some retirement plans—up to $10,000 or 150 percent of the regular catch-up amount, whichever is greater. This is another chance to boost your nest egg before retiring.
Age 62: Early Social Security
You can start receiving Social Security benefits as early as age 62, but your monthly payments will be significantly lower than if you wait until your full retirement age (67 for most people retiring after 2024). Most people benefit from waiting as long as possible.
Age 65: Medicare Enrollment
Open enrollment for Medicare, the government health insurance program, begins three months before your 65th birth month. The open enrollment period includes your birthday month and the three months before and after it. Even if you’re still working or not ready to retire, you may still need to enroll on time to avoid permanent penalties.
Ages 66-67: Full Retirement Age for Social Security
Depending on your birth year, your full retirement age for Social Security is between 66 and 67. If you wait until this age to start benefits, you’ll get your full monthly amount. For the majority of my clients, who have enough resources to fund their early retirement years, waiting until age 70 can provide some insurance against running out of money later.
Age 70: Delayed Social Security
Once you reach age 70, your Social Security payments will not increase anymore, so this is often the optimal time to begin collecting your benefits.
Ages 73-75: Required Minimum Distributions (RMDs)
Once you reach age 73 (or 75 if you were born in 1960 or later), you must start taking required minimum distributions (RMDs) from most retirement accounts, like traditional IRAs and 401(k)s. If you don’t take out at least the minimum amount each year, you could face big tax penalties. The RMD rules do not apply to Roth IRAs while the owner is alive.
Other Important Tips
- Consider long-term care insurance between ages 50 and 60. It’s kind of the optimal window to obtain lower premiums.
- Debt Reduction: Aim to pay off your mortgage, home equity loans, and credit card debt before retirement to lower your monthly expenses.
- Estate Planning: Update your will, trust, power of attorney, and other important documents as you near retirement.
Ages 50 to 75 are full of important financial milestones. By knowing what to expect and taking action at each stage, you can build a solid foundation for a secure and enjoyable retirement. Start early, save as much as you can, and make smart choices as you approach each milestone. And if things start getting too complicated, consider working with a Certified Financial Planner ™ Professional to help you make the best decisions.
This column is prepared by Rick Brooks, CFA®, CFP®. Brooks is an owner and senior financial advisor at Blankinship & Foster, LLC, a wealth advisory firm specializing in financial planning and investment management for people preparing for retirement. Brooks can be reached at (858) 755-5166, or by email at rbrooks@bfadvisors.com.
Category: Business, Finances, Local News, Seniors
