A picture of an elderly couple working on their finances at home
The road to retirement can be long. The first few years are often focused on breaking even and starting to set aside as much retirement savings as possible. Then the intervening years bring a greater focus on minimizing expenses and increasing retirement and non-retirement assets.
As one approaches retirement, that focus often changes once more as actual retirement becomes more of a reality. While saving should always be a focus, age-related rules for retirement accounts and age-based eligibility for certain retirement programs become particularly important.
Below are retirement opportunities and time frames by age:
in your 50s
· Age 50: Plan participants and IRA holders can begin making catch-up contributions, in addition to the contribution limits that apply to those under age 50. In 2023, plan participants who are at least 50 years old 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 retirement from an employer-sponsored plan. This withdrawal is generally penalty free.
· Age 59½: IRA owners can begin making withdrawals from their accounts without penalty.
in your 60s
Ages 60-63: Starting in 2025, the maximum annual catch-up contribution for people ages 60-63 will increase to $10,000 or 50% more than the IRS-published catch-up amount in 2024, which be greater). These recovery amounts will be indexed to inflation beginning in 2026.
· Age 62: A person is eligible to start claiming Social Security; however, the full retirement age (FRA), when a person is first eligible to receive full retirement benefits, is later. For people born in 1937 or earlier, the FRA is 65. Beginning with people born in 1938, the FRA gradually increases until it reaches age 67 for people born after 1959. As a result, at age 62, a individual should consider the best time to start claiming benefits given personal circumstances.
· Age 65: Medicare benefits begin at age 65 for all Americans. The enrollment period for first-time participants is seven months, beginning three months before the month the person turns 65 and lasting three months after the month the person turns 65. It is important to keep this in mind to avoid penalties for late enrollment and loss of health coverage.
in your 70s
· Age 70: A person is eligible to claim the largest monthly Social Security benefit if that person is late in receiving benefits.
Age 70½: An individual can give up to $100,000 each year to one or more charities directly from an IRA as a qualified charitable distribution (QCD), and can make a one-time QCD of up to $50,000 through a charitable gift annuity or a charitable remaining trust.
· Age 73: Required Minimum Distributions (RMDs) from retirement accounts begin. However, due to changes in legislation (specifically, the SECURE Act and the SECURE 2.0 Act), if a person turned 72 before 2023, the actual age at which RMDs began was as follows:
70½: if the person was 70½ before January 1, 2020
72: if the person was 72 years old after January 1, 2020 and before January 1, 2023
Wherever you are on your retirement journey, creating your ideal retirement lifestyle begins 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 find out more.
