The path to retirement can be long. The early years are often focused on meeting expenses and beginning to set aside as much retirement savings as possible. Then the middle years bring an increased focus on minimizing expenses and growing retirement and nonretirement assets.
As one gets closer to retirement, that focus often changes once again as actual retirement becomes more of a reality. While saving should always be a focus, the age-related rules for retirement accounts, and the age-based eligibility for certain retirement programs, become particularly important.
Below are retirement opportunities and deadlines by age:
In your 50s
· Age 50: Plan participants and owners of individual retirement accounts (IRAs) can begin to make catch-up contributions, in addition to the contribution limits that apply to those under the age of 50. In 2023, plan participants who are at least 50 can contribute an additional $7,500 to their employer-sponsored plan, and IRA owners can contribute an additional $1,000.
· Age 55: A plan participant may be eligible for an in-service withdrawal from an employer-sponsored plan. This withdrawal is generally penalty-free.
· Age 59½: IRA owners can begin taking withdrawals from their accounts penalty-free.
In your 60s
· Ages 60-63: Beginning in 2025, the annual maximum catch-up contribution for those age 60-63 will increase to the greater of $10,000 or 50% more than the catch-up amount as published by the IRS in 2024 (as indexed). These catch-up amounts will be indexed for inflation beginning in 2026.
· Age 62: An individual is eligible to begin claiming Social Security; however, full retirement age (FRA)—when a person first becomes eligible to receive full retirement benefits—is later. For people born in 1937 or earlier, FRA is 65. Beginning with people born in 1938, FRA gradually increases until it reaches age 67 for people born after 1959. As a result, at age 62, an individual should be considering the best time to begin claiming benefits given personal circumstances.
· Age 65: Medicare benefits start at age 65 for all Americans. The enrollment period for first-time participants is seven months, starting three months prior to the month the individual turns 65 and lasting for three months after the month the individual turns 65. It is important to be aware of this to avoid late enrollment penalties and loss of healthcare coverage.
In your 70s
· Age 70: An individual is eligible to claim the largest monthly benefit from Social Security, if that individual otherwise delayed receiving benefits.
· Age 70½: An individual may donate up to $100,000 each year to one or more charities directly from an IRA as a qualified charitable distribution (QCD), and may make a one-time QCD of up to $50,000 through a charitable gift annuity or a charitable remainder trust.
· Age 73: Required minimum distributions (RMDs) from retirement accounts begin. However, because of changes in legislation (specifically, the SECURE Act and the SECURE 2.0 Act), if an individual turned 72 before 2023, then the actual age that RMDs began were as follows:
· 70½—if the individual was 70½ before January 1, 2020
· 72—if the individual was 72 after January 1, 2020, and before January 1, 2023
Wherever you are in your journey to retirement, creating your ideal retirement lifestyle starts by working with a trusted financial partner. From investing and saving, to future income and legacy planning, CIBC Private Wealth works with retirement savers of all ages and backgrounds. Visit our Private Wealth page to learn more.