One of the most common questions we’re asked is, “When should I start saving for retirement?” The answer to this question is always going to be “the earlier the better,” even if you’re in your 20s. However, what a lot of people who ask this question are really looking for is some way to determine whether they’re currently saving enough compared to other people their same age.
There are a few very general age milestones that might give you some sort of idea as to where you stand, but keep in mind your financial situation is completely unique to you, so you might be able to quit working before or after these milestones:
- Age 50. Most people begin making serious retirement plans at age 50. Even if they have been saving and planning for years before, this is when it starts to seem the most “real” and when there is more serious effort made toward planning and saving. At age 50, the IRS allows people to begin contributing more money to their retirement plans in what is known as the “catch up” provision.
- Age 55. This is the first age at which federal employees with at least 30 years of service are eligible to retire and receive a complete, unreduced annuity.
- Age 59.5. Why 59 and a half? Who knows, but this is when you’re able to access the money in your retirement accounts without having to pay the standard 10 percent withdrawal penalty. If you are still working, you will also have access to what’s called an Age Based in Service Withdrawal, a one-time withdrawal you can use while still employed.
- Age 60. At this point, federal employees with at least 20 years of service are allowed to retire.
- Age 62. Federal employees with five or more years of service are allowed to retire, and those with 20 or more years of service get a slightly higher computation rate. This is also the age at which federal employees first become eligible for Social Security.
- Age 65. Federal employees become eligible for Medicare, and will be automatically enrolled in Part A. If you paid Medicare taxes throughout your career, there is no premium involved.
- Age 66. This is the “full retirement age” with social security.
Have any questions about retirement planning or any of these milestones? Contact us today at Money Mastery for financial assistance.