When I worked as a U.S. financial advisor, I had to familiarize myself with a number of age-related rules, such as “How old do you have to be to start collecting Social Security?” and “How old do you have to be to start making withdrawals from a 401(k)?” At the time, I couldn’t find a single resource in which all the age-related rules relevant to my practice were gathered together in one place - so I took it upon myself to create my own “cheat sheet”. And today, I’ve decided to share that cheat sheet with anyone who lives in the U.S. or has U.S.-based accounts and is interested in taking a more active role in their own financial future.
Without further ado:
50
- You become eligible to make additional contributions (“catch-up contributions”) to IRAs (individual retirement arrangements) & workplace retirement plans, beyond the general contribution limits that apply to everyone.
- If you’re the disabled widow(er) of a deceased spouse who worked long enough to receive Social Security benefits, this is the earliest you can start collecting survivor benefits.
- For certain jobs on the federal payroll, this is the earliest you can separate from your employer and withdraw money from the TSP without having to pay a 10% penalty tax. (Any money rolled over from your TSP into another plan or IRA will once again be subject to a 10% penalty tax for "premature" withdrawals.)
55
- If you work for an employer who sponsors a 401(k), 403(b), or TSP, this is the earliest you can separate from your employer and withdraw money from the relevant plan without having to pay a 10% penalty tax. (Any money rolled over from the plan into another plan or IRA will once again be subject to a 10% penalty tax for "premature" withdrawals.) Note on Governmental 457(b) plans: If you work for an employer who sponsors such a plan, then you can separate from the employer at any age and not have to pay a 10% penalty tax (although again, any money rolled over into another plan or IRA will become subject to a 10% penalty tax for "premature" withdrawals.)
- You become eligible to make additional contributions (“catch-up contributions”) to an HSA (health savings account), beyond the general contribution limits that apply to everyone.
59½
- The age at which withdrawals from an IRA, workplace retirement plan, or annuity are no longer considered premature. Prior to this age, withdrawals from an IRA, workplace retirement plan, or annuity need to qualify for a specific exception in order not to incur a 10% penalty tax. (In the case of a Roth IRA or a Roth account inside a workplace retirement plan, you also need to have completed a 5-year waiting period before the growth in the account can be withdrawn tax-free).
60
- If you’re the widow(er) of a deceased spouse who worked long enough to receive Social Security benefits, this is the earliest you can start collecting survivor benefits.
62
- The earliest age at which you can apply for a reverse mortgage.
- The earliest age at which you can claim Social Security benefits without any extenuating circumstances. Your benefit checks won’t be as high as they would be if you started at a later age, and until you reach your full retirement age, your benefits can potentially be reduced if you earn “too much” from a job or business. (Any such reductions will be temporary; the money that was withheld will be added back into your benefits once you’ve reached your full retirement age.)
63
- The earliest age at which your income is used to determine your premiums (how much you pay) for Medicare. (Medicare starts at age 65, and your premiums each year are calculated based on your income in the two preceding years.)
65
- The age at which you must enroll in Medicare unless you have other health insurance coverage. (If you’re already receiving Social Security benefits, your Medicare premiums are withheld from your Social Security payments.)
- The age at which you can withdraw money from an HSA (health savings account) and use it for a unrelated purposes without having to pay a 20% penalty tax. (The withdrawal will still count as taxable income; only withdrawals used for qualifying health/medical expenses are tax-free.)
- The age at which most defined benefit plans (pension plans) allow you to access your pension.
- If you were born before 1943, you reached your full retirement age for Social Security purposes either when you turned 65 or at a point between your 65th & 66th birthdays. (For specifics, see here.)
- Most deferred annuities will reward you with a higher payout rate if you defer the start of your lifetime income payments to this age (or later).
66
- If you were born between 1943 and 1954 (inclusive), you’ll reach your full retirement age for Social Security purposes when you turn 66. At the latest, this will be sometime in 2020.
- If you were born between 1955 and 1959 (inclusive), you’ll reach your full retirement age for Social Security purposes at a point between your 66th and 67th birthdays. (For specifics, see here.) At the latest, this will be sometime in 2026.
67
- If you were born in 1960 or later, you’ll reach your full retirement age for Social Security purposes when you turn 67. At the earliest, this will be sometime in 2027.
70
- The age after which there’s no further advantage to be gained by delaying the start of your Social Security benefits. (Up to this point, every year you defer the start of your benefits increases the amount of those benefits).
70½
- The age after which all pre-tax IRAs and all retirement plans from former employers become subject to a schedule of mandatory yearly withdrawals, known as RMDs (required minimum distributions).
85
- The age after which a QLAC (qualifying longevity annuity contract) must start sending you lifetime income payments.