Retirement Financial Milestones for Age 50 and Beyond
Don't miss key retirement financial milestones that can make the most of your savings
Saving for retirement is a lifelong process, but as you get closer to retiring, the pressure to save and make the most out of your nest egg increases. That’s why it’s important to take advantage of key retirement financial milestones in your 50s, 60s, and 70s.
Retirement financial milestones in your 50s
Generally speaking, by the time you reach your 50s, you should have six times the amount of your annual salary saved for retirement. If that seems daunting, don’t worry.
“If you’re in your 50s or 60s and still working, you still have time to save,” says Judith Corprew, Executive Vice President – Chief Compliance and Risk Officer at Patriot Bank, N.A.
If you’re a little behind plan, Corprew suggests honing your skills at stretching your dollars so you can save more. She suggests adopting habits like making your lunch daily instead of buying it at work to cut back on daily expenses.
“Learning to save money will also allow you to stretch your savings in retirement,” Corprew says. “Saving and thrifty habits will allow you to enjoy the golden years.”
50 years old
Financial responsibilities like purchasing a house or raising children may have put a strain on your retirement savings in your 30s and 40s. This makes your 50s a great time to make up for lost time. At age 50, most retirement savings plans will allow you to make catch-up contributions to your Traditional or Roth IRA, 401(k), or 403(b).
Short-Term Recovery Care insurance
Two common retirement planning mistakes are not planning for the unexpected and not buying the right insurance at the right time. While many people don’t consider purchasing Short-Term Recovery Care insurance until later in life, age 50 is a good time to start shopping around. If you suffer an unexpected illness or injury that requires a short stay of 12 months or less somewhere other than a hospital, Medicare and most health insurance won’t cover all the costs. That means, if you need care in a nursing home, assisted living facility, adult daycare, or hospice, you could face considerable out-of-pocket costs.
55 years old
During the year in which you turn 55, you’re allowed to increase your contributions to your Health Savings Account (HSA) through your employer. If you leave your place of employment during the year you turn 55 or after, you may be allowed to withdraw from qualified plans, such as 401(k) or 403(b), without an additional tax penalty.
59 1/2 years old
This is a key retirement financial milestone. You can now access most retirement accounts, such as IRAs, 401(k)s, and 403(b)s, without a 10 percent additional tax penalty. And if you’re still working, you may be able to diversify by rolling funds from qualified plans to an IRA.
Retirement financial milestones in your 60s
One of your financial milestones by age 60 should be accumulating at least eight times your annual salary for retirement. You may also want to consider hiring a financial advisor for seniors to guide you through key decisions, like determining when to start claiming benefits and what health insurance coverage to buy before and after Medicare.
60 years old
If you have lost your spouse, you become eligible at age 60 to collect Social Security survivor’s benefits if your spouse was eligible and you haven’t remarried before your 60th birthday. If you collect survivor’s benefits prior to your full retirement age, they will be reduced, but they won’t impact your individual benefits. You can switch to your benefit at age 62 if it’s higher. Any benefits collected before age 65 are subject to an earnings limit, so any earned income may reduce benefits.
62 years old
Social Security eligibility
The month following your 62nd birthday, you become eligible to collect Social Security individual or spousal benefits. The individual benefit will be about 30 percent less than the full retirement benefit, and it will be subject to the earnings limit, so earned income may reduce benefits.
Health insurance before Medicare
You won’t be eligible for Medicare until the month during which you turn 65, so you’ll need to continue on your employer-sponsored health plan or search for alternative insurance if you’ve retired.
Jenny Smith, product manager at Medico Insurance Company, says if you’re a pre-Medicare retiree, you should look closely at your employer plan or Affordable Care Act (ACA) plan to make sure the coverage is meeting your needs. If it isn’t, she suggests considering supplemental coverage, such as Hospital Indemnity and Dental, Vision, and Hearing insurance. She says they will minimize coverage gaps and withdrawals from your retirement savings to cover expenses.
65 years old
You become eligible for Medicare during the month of your 65th birthday. If you haven’t been collecting Social Security benefits since age 62, you should apply for Medicare Part A three months in advance of your 65th birthday to avoid a gap in your health insurance coverage. If you don’t plan to continue using your employer-sponsored health plan, you should also apply for Medicare Part B. If you choose to use a Medicare Advantage plan instead of original Medicare, you’ll also want to purchase it at this time.
Medicare Part A covers hospital expenses, and Part B is basic health insurance that covers medically necessary services and preventative care. Neither covers everything, so you’ll want to consider Medicare Supplement insurance to cover potentially expensive out-of-pocket costs, like coinsurance, copayments, and deductibles. You’ll need to buy two separate Medicare Supplement policies if you and your spouse need coverage because a Medicare Supplement policy only covers one person.
Medicare Supplement insurance is not the same as Medicare Advantage, which provides a different avenue to get Medicare Part A and B benefits. You can’t use a Medicare Supplement policy and Medicare Advantage plan at the same time. But you can supplement your Medicare Advantage coverage with Hospital Indemnity and Dental, Vision, and Hearing insurance.
66-67 years old
Full retirement age
Also known as “normal retirement age,” full retirement age is no longer 65 years old for everyone. The 1983 Social Security Amendments raised the full retirement age for people born in 1938 or after, and it’s been adjusted periodically since. For example, if you were born between 1943 and 1959, your retirement age is 66, and if you were born in 1960 or later, your retirement age is 67. Refer to the Social Security Administration’s Retirement Age Calculator to find out when you qualify for full retirement.
Unfortunately, one financial milestone no one wants to think about but is very necessary is estate planning. It not only designates your wishes, but it alleviates financial stress on your loved ones after you’re gone. Our Ultimate Estate Planning Guide and checklist will walk you through each step — from gathering necessary documents to learning the best time to buy Final Expense or Preneed Funeral insurance.
Retirement financial milestones in your 70s
70 1/2 years old
The year when you turn 70 1/2 is referred to as the “first distribution year” and required minimum distributions (RMDs) must begin if you haven’t started collecting them at age 62 or your full retirement age. Visit the IRS’s RMD page to learn about specific requirements for all types of accounts.
7 1 and beyond
Life expectancies are much longer than in the past, but healthcare prices are rising. It’s important in your 70s to maintain the savings you’ve acquired and abate extra expenses to stretch your retirement funding. Focus on eliminating debts, such as mortgage and credit cards, and evaluate the levels of risk in your investment portfolios. If you haven’t already, research Long-Term Care insurance options. If the rising costs of Long-Term Care insurance are not a viable option for you, consider Short-Term Recovery Care insurance to cover recoveries from unexpected illnesses or injuries.
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