7 Milestones At Age 50 & Above

Steven Neeley | Sep 23, 2024

Categories

Retirement

I’m not 50 yet, but I can’t help feeling it looming closer every day. The thought of hitting that milestone brings a bit of dread, not just because of the number, but because it feels like a reminder that time is moving faster than I ever expected. And it’s really starting to hit me when I talk to my son about what it was like growing up in the 80s—sharing stories about Knight Rider, The Goonies, or Back to the Future. His blank stares remind me of when my parents used to talk about watching Mr. Ed or I Dream of Jeannie—it felt like they were talking about a completely different world. And now, I’m the one starting to sound like the relic of a bygone era.

The reality is, while I’m still a few years away from 50, I can already see that it’s going to be a turning point—especially when it comes to retirement. Every birthday after 50 comes with important financial decisions that could either put you ahead or leave you scrambling. Whether it’s catch-up contributions, Social Security strategies, or planning for Medicare, these milestones are approaching fast, and you can’t afford to ignore them.

So if you’re feeling the same way—caught between nostalgia for the past and a growing sense of urgency about the future—it’s time to start getting serious. We don’t have to wait until we hit 50 to take control of our retirement. Let’s explore the milestones coming after 50 and what we can do now to make sure we’re ready when they arrive.

Age 50: Catch-Up Contributions

Turning 50 not only brings about personal reflections but also significant financial opportunities—like catch-up contributions. At this age, you can start contributing extra money to your retirement accounts beyond the normal limits. It’s a way for those of us who might’ve had to slow down contributions during earlier years—whether due to raising kids, paying off debt, or simply not earning enough—to now “catch up” and boost retirement savings.

These catch-up contributions don’t replace standard contributions; instead, they increase the contribution limits at age 50, letting you put more into your retirement accounts as a way to “make up” for previous years, when contributions may not have been maxed out.

Notably, catch-up contributions:

Differ by type of retirement account
Are updated annually for inflation by the Internal Revenue Service (IRS)

The table below shows the catch-up contributions permitted for different types of retirement accounts in 2024.^1,10

Retirement Account	2024 Catch-Up Contributions
401(k)	$7,500
403(b)	$7,500
457	$7,500
Thrift Savings Account	$7,500
Simple IRA	$3,500
Traditional or Roth IRA	$1,000

These catch-up contributions are available in a variety of accounts—401(k)s, 403(b)s, traditional and Roth IRAs—and can make a huge difference in the final balance when it’s time to retire. The maximum standard contribution to a 401(k) for 2024 is $23,000, but once you hit 50, you can throw in an additional $7,500, making the total contribution $30,500. It’s an opportunity to front-load your retirement savings during what are often peak earning years.

One important thing to keep in mind is that these contribution limits are adjusted for inflation every year, so while you may be saving at the maximum amount now, future increases allow you to keep up with rising costs. Also, the Secure Act 2.0, set to go into effect in 2025, will make even more generous catch-up options available for those in their 60s—up to an additional $10,000 annually in some accounts.

Age 55: Penalty-Free 401(k) Withdrawals (Rule of 55)

Are you planning to retire between 55 and 59½? If so — and if you have a 401(k) or a 403(b) retirement account, you could start taking advantage of the Rule of 55 as soon as your 55th birthday.

Not everyone plans to retire at 65 or older. Some are ready to step away from full-time work earlier. If you’re looking at retiring between 55 and 59½, you’ve got a potential lifeline—the Rule of 55. This allows you to withdraw funds from your 401(k) or 403(b) without the 10% penalty typically charged for early withdrawals. That’s right, if you retire at 55, you could start using your retirement funds without the extra penalty, though income taxes still apply.

Please note that:

Income taxes will still apply to any withdrawals.
The Rule of 55 only applies to 401(k) or 403(b) accounts associated with the job from which you’re retiring after the age of 55 and before 59 ½.³
The Rule of 55 does not apply to IRAs or 401(k)s from a previous employer.³

For many, the Rule of 55 provides a safety net for early retirement or those facing unexpected layoffs. From early retirement or unexpected layoffs, having the flexibility to access your 401(k) without worrying about penalties can ease the transition if your plans or career circumstances change.

Age 59½: Penalty-Free IRA & 401(k) Withdrawals

Reaching age 59½ opens another financial door—penalty-free withdrawals from all retirement accounts, including IRAs and previous 401(k)s. This is a significant moment for many people because it signals more freedom in retirement planning. The 10% penalty for early withdrawal is now off the table, though you still need to be mindful of the taxes that apply.

For those nearing retirement, this milestone might coincide with a desire to scale back at work. Perhaps you’re thinking about shifting to part-time or a consulting role instead of full-time hours. Having penalty-free access to your retirement funds can make that transition easier, giving you a buffer as you reduce your workload.

Additionally, this is often a time when people begin making strategic decisions about how to turn their nest egg into a sustainable retirement income. You might be balancing withdrawals with Social Security benefits or adjusting your portfolio to ensure your investments continue to grow while supporting your current lifestyle. If you’re already retired by this age, 59½ could mark the point where you increase your retirement income to maintain or enhance your lifestyle as you settle into this new chapter.

Although these withdrawals can still be taxed as income, removing the withdrawal penalties can open up more financial resources at a time when you may be:

Considering scaling back work-wise, possibly with fewer hours or part-time status.
Roughly 3 to 5 years off from full retirement (please note that the average retirement age for men is 65; it’s 63 for women).⁵
Ready to increase your retirement income if you’re already retired.

Age 62: Eligibility for Social Security Benefits

At 62, you can start collecting Social Security benefits, opening up another avenue for retirement income. There is a tradeoff here, however.

If you start collecting Social Security at 62:

You’ll be doing so before “full retirement age” (FRA), which is 67 for anyone born in 1960 or after.⁶
Your benefits will be reduced by 30%.
If you have a spouse, you’re partner’s benefits will drop by 35%.⁶

So, let’s say you start to collect Social Security benefits in 2024. If you are:

62, you’d get $2,710/mo.⁷
67 (your FRA), you’d collect $3,822/mo.⁷
70, you’d see $4,873/mo.⁷

Depending on your retirement income and your needs, there can be pros and cons to taking your Social Security benefits at 62, waiting until you reach your FRA, or waiting longer.

Ultimately, deciding when to take Social Security depends on your overall financial picture. If you have other sources of retirement income or anticipate living a long life, it might make sense to delay taking benefits to maximize your monthly payout. But if you need the income sooner rather than later, or if health concerns suggest a shorter lifespan, taking benefits early might be the right choice.

Age 65: Medicare Enrollment

At 65, you’re eligible for Medicare. That can help you start to reduce your healthcare costs if you know how to navigate the ins and outs of this complex system — and if you enroll during the “Initial Enrollment Period” (IEP).⁸

Your IEP is a 7-month timeframe that starts 3 months before you turn 65, ending 3 months after the month you turn 65.⁸ If you miss your IEP:

You can face financial penalties, which increase the longer you wait.⁸
You may have to pay a penalty known as the “Premium-Part A.”⁸
You may have to wait and sign up for Part B coverage, paying a monthly late enrollment penalty for as long as you have this coverage.⁸

Navigating Medicare isn’t always simple—there are several parts (A, B, C, and D) that cover different aspects of your health care. It’s crucial to understand how each one works and what you need based on your health, lifestyle, and budget. Seeking guidance from a financial advisor or healthcare expert can help you avoid mistakes and ensure you get the coverage you need at the lowest cost possible.

Age 66 to 67: FRA for Social Security

Your FRA is between 66 and 67, depending on when you were born.⁶If you wait to claim Social Security benefits until your FRA, you can receive full benefits, without any reductions.⁷

Keep in mind that these benefits max out when you hit 70.⁷ While it can make sense to wait until FRA or 70 to start collecting your Social Security benefits, that may not be the best strategy for everyone’s retirement.

Regardless of when you choose to claim, understanding your FRA and how it impacts your Social Security payout is essential for effective retirement planning.

Age 73: Required Minimum Distributions (RMDs) from Retirement Accounts

By 73, you’ll need to start taking required minimum distributions (RMDs) from certain retirement accounts. That’s required by current U.S. tax laws, with the RMD varying based on:

Your account balance as of December 31st of the previous year: RMDs apply to traditional IRAs, 401(k)s, 403(b)s, and most other tax-deferred retirement accounts.⁹
Your life expectancy: This is determined by IRS life expectancy tables.$^9$ The older you get, the more your RMD will increase. As that happens, new risks of moving into higher tax brackets can arise.⁹

RMDs were designed to ensure retirement account withdrawals and, in turn, taxable income for the U.S. government. That’s why there can be hefty penalties for not taking RMDs.⁹

In fact, if you fail to take your RMD for a particular year (i.e., by December 31st of a given year), you could face a penalty of up to 50% of the amount you were supposed to withdraw but didn’t.⁹

Like Social Security benefits, RMDs can be complex. If you don’t plan for them properly, they can interfere with your retirement income plans and your tax mitigation strategies. As you age, your RMDs will increase, potentially pushing you into a higher tax bracket. Incorporating RMD strategies into your retirement plan can help you avoid surprises and ensure you’re prepared for these withdrawals.

How to Manage Key Financial Milestones at 50 & Above

The above milestones may not be the only ones to plan for and keep track of. No matter where you’re at with retirement planning or essential financial milestones after 50, you don’t have to juggle it alone.

Navigating it all with the support of a financial professional can help you stay informed, shift gears whenever necessary, and make more informed choices, so you can live your best life in retirement.

Sources:

This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets.

7 Milestones At Age 50 & Above