The Most Important Ages of Retirement

Retirement is a series of milestones that arrive as you age. Here are the ones you should know about.

The retirement clock doesn’t start the day you stop working. It’s better to think of this period of your life as a range of important dates and milestones spread across several decades, some of which arrive while you’re still earning a paycheck. In short: It’s a process.

Why? The reality is that contribution limits for your retirement accounts change as you age, and tax penalties for certain kinds of withdrawals disappear. Similarly, you become eligible for different programs at different ages, and at a certain point, you’ll be required to start taking a minimum amount from most of your retirement accounts each year.

Not all milestones require that you do something. But it’s still important to know about them. Here are the key ones, along with some suggestions about moves you could make.

Age 50: You can start making catch-up contributions to a company retirement plan or IRA.

• 401(k), 403(b), 457(b): Standard limit in 2025 is $23,500. Workers 50+ can add $7,500, totaling $31,000.
• Ages 60–63: Special expanded catch-up limit of $11,250, totaling $34,750.
• IRAs (Traditional or Roth): Limit is $7,000; those 50+ can add $1,000.
• Starting 2026: For employer-sponsored plans like 401(K), 403(b), and 457(b), if you earn over $145,000, all catch-up contributions must go into a Roth account (after-tax).

Ages 50–60: You may qualify for potential retiree benefits from work based on age and time in service.

Review any work-related benefits for retirees to understand what will be available to you in retirement, as well as any you may need to replace. Also, review your company’s stock-vesting provisions upon retirement as well as pension choices, if available.

Age 55: You can make catch-up contributions to a Health Savings Account (HSA).

In 2025, the HSA contribution limits are $4,300 for self-only coverage and $8,550 for family coverage. If you’re 55 or older, you can make an extra catch-up contribution of $1,000. Any amount you can save in such accounts can help you meet your immediate medical needs or set aside for health expenses in retirement.

Also age 55: If you retire early, you could be exempt from the 10% tax penalty on early retirement account withdrawals.

If you leave your job during or after the year you turn 55, you can withdraw from a 401(k) or 403(b) of the current employer without the 10% early withdrawal penalty.

• Public safety employees (e.g., police, firefighters, air traffic controllers) qualify at age 50.
• 457(b) plans don’t have an early withdrawal penalty after separating from service.
• You can roll over old retirement funds into your current employer’s plan to access them penalty-free, though it’s best to consult an advisor before withdrawing.
• The IRS also allows penalty-free withdrawals before 591/2 from traditional IRAs under section 72(t) if the distributions are determined as a series of substantially equal periodic payments.

Age 59 ½: Generally, the 10% early withdrawal penalty no longer applies to IRAs or qualified retirement plans.

If you have significant tax-deferred savings, you may want to consider drawing them down (in combination with your taxable accounts) as early as possible. This can help you avoid a potential spike in income once your required minimum distributions (RMDs) start at age 73 (more on those below).

Why would this be a problem? It’s possible that RMDs could push you into a higher tax bracket once they kick in, especially after accounting for Social Security, pensions, and other income.

At Wealth Analytics, we have a few strategies for these situations, one of which is a Roth Conversion.

Age 60: A surviving spouse becomes eligible for Social Security benefits.

If this is your situation, let’s discuss Social Security strategies, including those with surviving spouse benefits.

Age 62: You become eligible for early retirement benefits from Social Security.

You can start taking benefits as early as age 62, wait until you’ve reached your full retirement age, or hold out to age 70. The closer you get to age 70, the larger your benefit. While there’s no “correct” claiming age for everybody, the rule of thumb is that if you can afford to wait, delaying Social Security can pay off over a long retirement.

That said, if you need the income right away or your income strategy depends on early withdrawals, then you should consider starting sooner. Strategies can include considering health and other factors as well.

Age 65: You become eligible for Medicare.

Medicare has specific enrollment periods, and if you miss them, you could be hit with late-enrollment penalties. However, you may be able to enroll after age 65 without penalties if you continue to work past age 65 and keep your employer coverage. Pay close attention to Medicare enrollment periods if you have retiree health insurance from a former employer or are under COBRA. These types of coverage do not allow you to defer enrollment past age 65 without penalties and may leave gaps in your coverage. It’s important to get this right, so if you’re in doubt, get help from HR or contact Medicare.

Also note that once you are enrolled in Medicare, you’re not permitted to make contributions to a HSA. If you enroll in Medicare after reaching age 65, Medicare will backdate your enrollment by six months (but no earlier than age 65). To avoid an IRS penalty, make sure you stop contributions to the HSA in time.

Also age 65: The 20% penalty on non-qualified HSA distributions no longer applies.

After age 65, the 20% penalty on non-qualified HSA withdrawals ends. You can use HSA funds for any purpose, paying only ordinary income tax on non-medical expenses – similar to IRA withdrawals. Before 65, non-medical withdrawals trigger both taxes and a 20% penalty.

Ages 66–67: You become eligible for full retirement age (FRA) benefits from Social Security.

If this is your situation, let’s review strategies for taking Social Security now or waiting for delayed retirement credits (8% per year) up until age 70.

Age 70: Maximum benefits for Social Security attained.

Your benefits stop increasing at age 70, so don’t delay starting them.

Age 70 ½: You become eligible to make Qualified Charitable Donations from an IRA.

In 2025, you can give up to $108,000 (indexed for inflation) directly from your IRA to a qualified tax-deductible charity. QCDs can be an effective way to give to charity as well as reduce your tax bill, since they are excludable from taxable income. Once you reach the age when RMDs kick in, a QCD can be used to satisfy all or a portion of the RMD.

Age 73: RMDs begin.

At age 73, you must start taking RMDs from tax-deferred accounts (401(k), IRA, 403(b), etc.). You can delay the first RMD until April 1 of the following year, but that means taking two distributions in one tax year, potentially raising your taxable income.

RMDs are based on your account balance and life expectancy, increasing as you age. Missing or underpaying an RMD can trigger a 25% penalty (reduced to 10% if corrected promptly).

While RMDs are mandatory at 73, consider starting withdrawals earlier to manage future tax burdens and ensure your assets support your retirement goals.

Sources:

https://wealthanalytics.com/how-to-make-the-most-of-a-health-savings-account-hsa-in-2025/
https://www.irs.gov/retirement-plans/substantially-equal-periodic-payments
https://wealthanalytics.com/understanding-how-investment-returns-are-taxed-updated-for-2025/
https://secure.ssa.gov/apps10/poms.nsf/lnx/0900711040
https://wealthanalytics.com/medicare-open-enrollment-financial-planning/
https://wealthanalytics.com/turn-your-rmd-into-charitable-donations/