Everyone should mark these 6 retirement milestones on their calendar

We tend to think of retirement as a single date on the calendar, perhaps celebrated with a little party. But for the federal government, retirement is more complicated. You have to reach certain ages before you can unlock benefits like Social Security, Medicare, and even penalty-free access to your retirement funds.

Here are six such milestones that everyone should mark on their calendar even if they don’t plan to retire for a while.

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1. 50 years old: you become eligible for catch-up contributions

Adults age 50 and over can make catch-up contributions to their retirement accounts. These vary by account type. In 2022, seniors can contribute up to $6,000 more to their 401(k) and $1,000 more to their IRAs, bringing their annual contribution limits to $27,000 and $7,000, respectively. .

You don’t have to wait until your birthday is over before you start making these contributions. As long as you’re 50 or older by the end of the year, you’re good to go.

2. 59 1/2 years: you can make pension withdrawals without penalty

Before 59 1/2, it is difficult to withdraw funds from your retirement accounts without paying a 10% early withdrawal penalty. There are exceptions for Roth IRA contributions because you have already paid taxes on them. And you can also tap into your retirement savings sooner if you have large medical bills, are paying for college, or are buying a first home, among other things.

But if you don’t qualify for any of these exceptions, you’ll have to pay a fee to access your retirement funds. While many retire after this age, those planning to retire earlier will need to set aside money in a taxable brokerage account or savings account that they can access at any time.

3. 62 years old: you become eligible for social security benefits

Seniors can apply for Social Security as early as 62 if they wish, but it will reduce the amount of their checks. If you enroll as soon as you become eligible, your checks will be up to 30% less than your Primary Insurance Amount (PIA) – the full benefit you are entitled to based on your employment history.

It may be a good idea to apply for Social Security early if you have a terminal illness or a medical history that leads you to believe you won’t live long. Some people also decide to apply earlier because they need the extra help provided by their benefit checks to stay on top of their bills.

4. 65: you become eligible for Medicare

Seniors become eligible for Medicare at age 65. Before that age, they will have to rely on an employer’s health insurance or a private health insurance policy.

After you enroll, the federal government deducts the cost of your Medicare Part B premiums from your Social Security checks if you are already claiming them. Otherwise, you will receive an invoice for your premium charges.

5. 66 or 67: you reach full retirement age

Full Retirement Age (FRA) is the age at which you become eligible for your PIA based on your employment history. Claiming before you reach that age lowers your checks, while delaying benefits beyond that age increases them. Some people choose to register with their FRA as a middle ground between claiming early and claiming late.

Your FRA depends on your year of birth. For those born between 1943 and 1954, it is 66 years old. Then it increases by two months each year thereafter until it reaches age 67 for those born in 1960 or later.

6. 70 years old: you are entitled to your maximum social security benefit

Each month that you delay, Social Security increases your benefits until you reach age 70. People who expect to live to age 80 or beyond and can fund their retirement to that point may choose to delay benefits until age 70 in hopes of securing a longer life . benefit to. But because they receive fewer checks over their lifetime, it takes some time for the larger payments they receive to catch up before the total amount received begins to tilt in favor of these late claimants.

Keep these dates in mind as you approach retirement and try to prepare for them in advance. Thinking about when you plan to claim Social Security and how you’ll fund your retirement at each stage can help you avoid surprises later.

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