Retirement planning isn’t just about picking the year you want to stop working.
As we work with clients at Northern Peak Financial, we often find that retirement is really a series of decisions. When should you increase your retirement savings? When can you access retirement accounts without an early-withdrawal penalty? When should you consider Social Security? What happens with Medicare? And when do required distributions become part of the conversation?
Understanding the important ages along the way can help you plan ahead rather than react when a deadline arrives.
Here are some of the retirement milestones worth having on your radar.
Age 50: An Opportunity to Save More
Turning 50 opens the door to catch-up contributions in many retirement accounts.
For people who feel they haven't saved enough or who simply have more available cash flow as they approach retirement these additional contributions can be an important planning opportunity.
This is also a good time to start looking beyond the question of how much have I saved?
Consider:
- When would you realistically like to retire?
- What will your retirement expenses look like?
- How much income will you need?
- What debts do you want paid off beforehand?
- How will taxes affect your retirement income?
- Is your investment strategy appropriate for your timeline?
Your 50s can be some of your highest-earning years. Using them effectively can make a significant difference.
Age 55: More Options May Become Available
Age 55 brings a couple of lesser-known planning opportunities.
If you're eligible to contribute to a Health Savings Account, you may qualify for an additional HSA catch-up contribution beginning at 55.
There's also what is commonly called the Rule of 55.
Under certain circumstances, if you leave your employer during or after the calendar year in which you turn 55, you may be able to take distributions from that employer's 401(k) or 403(b) without the usual 10% early-withdrawal penalty.
That doesn't necessarily mean you should withdraw the money. But for someone considering retirement before 59½, knowing this rule exists can provide additional flexibility.
Age 59½: Retirement Accounts Become More Accessible
Age 59½ is one of the better-known retirement milestones.
Generally, once you reach 59½, you can take distributions from retirement accounts such as traditional IRAs and 401(k)s without the additional 10% early-withdrawal penalty.
That does not mean the distributions are necessarily tax-free. Traditional retirement-account withdrawals are generally subject to ordinary income taxes.
More importantly, reaching 59½ doesn't mean you should automatically begin taking money out.
This is where retirement-income planning becomes important. Which account should you use first? Should you take money from taxable investments, traditional retirement accounts or Roth assets? Could a Roth conversion make sense?
The order in which you use your assets can potentially have long-term tax implications.
Ages 60–63: A Critical Planning Window
The early 60s can be an especially important period.
Under current rules, certain employees ages 60 through 63 may be eligible for enhanced catch-up contributions to employer-sponsored retirement plans.
For someone in the final years of a career, that can create an opportunity to accelerate retirement savings.
Age 60 is also significant for certain surviving spouses because Social Security survivor benefits may become available.
These rules can get complicated quickly, which is why we believe Social Security decisions should be considered as part of your broader retirement-income strategy—not in isolation.
Age 62: Social Security Becomes Available
At 62, you can generally begin claiming your own Social Security retirement benefit.
But can and should are very different questions.
Claiming before your full retirement age generally results in a permanently reduced monthly benefit. Waiting can increase the benefit you receive later.
There isn't one Social Security strategy that's right for everyone.
We typically look at factors such as:
- Current income needs
- Other retirement assets
- Health and longevity
- Spousal benefits
- Taxes
- Employment income
- Overall retirement goals
Social Security is an income decision that can affect decades of retirement, so it deserves more analysis than simply claiming as soon as you're eligible.
Age 63: Start Thinking About Medicare Costs
Why does age 63 matter if Medicare generally begins at 65?
Because Medicare premiums can be affected by your income from two years earlier.
Higher-income retirees may be subject to the Income-Related Monthly Adjustment Amount, commonly known as IRMAA, which can increase Medicare Part B and Part D costs.
This makes tax planning before retirement particularly important.
Large capital gains, retirement-account distributions, Roth conversions and other taxable-income events may have consequences beyond your income-tax bill.
Sometimes a financial decision today affects expenses several years down the road.
Age 65: Medicare
For many retirees, 65 is one of the biggest milestones because Medicare eligibility begins.
Medicare planning should ideally start before your 65th birthday so you understand your enrollment periods, coverage choices and how Medicare fits with any employer-sponsored health insurance.
If you have an HSA, Medicare also creates another planning consideration because enrolling in Medicare generally affects your ability to continue making HSA contributions.
Healthcare is often one of the biggest expenses in retirement, so it needs to be incorporated into your overall retirement-income plan.
Age 67: Full Retirement Age for Many Workers
For people born in 1960 or later, 67 is Social Security full retirement age.
At full retirement age, you're eligible for your full Social Security retirement benefit based on your earnings record.
But full retirement age isn't necessarily the best age to claim.
You may claim earlier, or you may decide to delay. The appropriate strategy depends on your financial situation.
The important point is to make the decision intentionally.
Age 70: Social Security Delayed Credits Stop
Waiting beyond full retirement age to claim Social Security can increase your monthly benefit through delayed retirement credits.
Those credits stop at age 70.
For someone who has sufficient assets to support their lifestyle while delaying Social Security, waiting can potentially provide a larger guaranteed monthly benefit later in retirement.
But once again, there isn't a universal answer. Retirement planning should consider your entire financial picture.
Age 70½: Charitable Giving Opportunities
For charitably inclined retirees, age 70½ introduces another potentially valuable planning tool: the Qualified Charitable Distribution (QCD).
A QCD allows eligible IRA owners to send money directly from an IRA to qualifying charitable organizations, subject to IRS rules and annual limits.
For some retirees, QCDs can become an effective part of both their charitable-giving and tax-planning strategies.
Ages 73–75: Required Minimum Distributions
Eventually, the government requires you to begin taking money from most tax-deferred retirement accounts.
These are called Required Minimum Distributions, or RMDs.
The age at which RMDs begin depends on your birth year under current law.
This is why we don't believe tax planning should suddenly begin when RMDs start.
The years between retirement and your RMD age can sometimes create planning opportunities. Depending on your circumstances, those years may be a time to consider strategies such as Roth conversions, planned IRA withdrawals or charitable giving.
The goal is to look ahead.
Retirement Planning Is About Connecting the Milestones
The biggest takeaway isn't any single age.
It's how all of these ages and decisions work together.
A decision to retire at 62 affects your healthcare strategy before Medicare. Your Social Security decision affects your retirement income. Retirement-account withdrawals affect your taxes. Your taxable income can affect Medicare premiums. And decisions made in your 60s can influence your required distributions and taxes later in retirement.
That's why we believe retirement planning should be coordinated.
At Northern Peak Financial, we help clients look at the entire picture investments, retirement income, Social Security, taxes, healthcare, insurance and estate considerations to build a strategy around the retirement they actually want.
You don't need to wait until one of these milestone birthdays to start planning.
In fact, one of the most important retirement ages is simply the age you are today.
The earlier you understand what's coming, the more options you may have when you get there.
Northern Peak Financial
Helping individuals and families make informed financial decisions through every stage of life.
This material is for educational and informational purposes only and should not be considered individualized investment, tax, legal, or financial advice. Rules and limits may change, and individual circumstances vary. Consult the appropriate financial, tax, legal, or benefits professionals regarding your specific situation.