Milestone Ages

“The days are long, but the years are short.”
— Gretchen Rubin

This quote resonates not only with parents but with anyone journeying from their first job to retirement. While major life events—marriage, children, homeownership—are easy to spot, there’s another set of milestones defined by financial rules and opportunities that can shape your retirement security. Understanding these milestone ages can help you maximize savings, avoid costly penalties, and unlock key benefits as you plan your financial future.

Below, we’ll walk through the most important ages to keep on your radar, explain the terms you might not know, and highlight the impact of recent legislative changes like the SECURE 2.0 Act.

Key Financial Milestone Ages

Age 50: Catch-Up Contributions Begin

• Catch-up contributions allow those aged 50 and older to contribute extra money to retirement accounts, above the standard annual limit.
• For 2025:
  • 401(k), 403(b), SARSEP, 457(b): Additional $7,500 (total $31,000).
  • IRA: Additional $1,000 (Total $8,000).
  • SIMPLE 401(k): Additional $3,500 (total $20,500).
• Why does this matter: Great for those who need to catch up on savings or lower taxable income.

Age 55: The Rule of 55

• The Rule of 55 permits penalty-free withdrawals from most employer’s 401(k) or 403(b) plans once you separate service from the employer. Normally, early withdrawals (before 59½) incur a 10% penalty.
  • While the IRS allows for this provision, Employers are not required to include this provision in their plan documents, so you must confirm whether your specific plan allows it.
• This rule doesn’t apply to IRAs or to funds rolled over into an IRA.
• Taxes still apply to withdrawals from pre-tax contributions.

Age 55: HSA Catch-up Contributions

• HSA Catch-up contributions allow those who are 55 or older by the end of the tax year to contribute extra money to their HSA Account, above the standard annual limit.
• For 2025, you can contribute $1,000 extra.
• If both spouses are 55 or older and each has their own HAS, both can make separate catch-up contributions.

Age 59½: No More Early Withdrawal Penalty

• Thanks to the SECURE 2.0 Act, those aged 60–63 by December 31st can make “super” catch-up contributions to workplace retirement plans starting in 2025.
• For 401(k) plans, the catch-up limit increases to $11,250 for this group. SIMPLE IRA participants can contribute up to $5,250 extra.
• This is a unique opportunity to significantly boost your retirement savings as you approach retirement.
• As a bonus, most 401(k) and 403(b) plans allow for an in-service rollover at age 59 ½, allowing you to rollover your assets from your employer plan into an IRA, while you are still employed and contributing to the plan.

Age 60: “Super” Catch-Up Contributions

• Thanks to the SECURE 2.0 Act, those aged 60–63 by December 31^st can make “super” catch-up contributions to workplace retirement plans starting in 2025.
• For 401(k) plans, the catch-up limit jumps to $11,250 for this group. SIMPLE IRA participants can contribute up to $5,250 extra.
• This is a unique opportunity to boost your savings as retirement approaches.

Age 62: Social Security Eligibility

• This is the earliest age you can claim Social Security retirement benefits, but your monthly benefit will be permanently reduced—up to nearly 30%—if you claim before your Full Retirement Age (FRA).
• Factors influencing when to claim include your health, financial needs, work plans, and concerns about Social Security’s long-term solvency.
• If you claim benefits at 62 and continue working, your benefits may be reduced if your earnings exceed the annual limit.
  • In 2025, if you are under FRA for the entire year, $1 of benefits will be withheld for every $2 earned above $23,400.
  • The earnings test applies only to wages and net self-employment income, not pensions or investment income.
• Benefits withheld due to excess earnings are not lost; they are recalculated and may increase your benefit once you reach FRA.

• Age 65: Medicare Eligibility

• Medicare eligibility begins at age 65. Your Initial Enrollment Period spans seven months: three months before your 65th birthday, the month of your birthday, and three months after.
• Delaying enrollment in Medicare Part B (medical insurance) and Part D (prescription drug coverage) can result in higher premiums unless you have qualifying employer coverage.
• Even if you continue working past 65 with employer coverage, you should coordinate enrollment carefully to avoid penalties.

Age 65: Homestead Exemption (Varies by State)

• A homestead exemption reduces the taxable value of your primary residence, lowering your property tax bill.
• South Carolina: Residents must be at least 65 by December 31 of the prior year, have been a legal resident for at least one year, and occupy the home as their primary residence. The exemption applies to the first $50,000 of the home’s fair market value.
• North Carolina: Residents 65 or older with income below a set threshold may exclude the greater of $25,000 or 50% of the appraised value of their home from property taxes.
• Since homestead exemption rules vary widely, it’s important to check with your local county auditor’s office for eligibility and application deadlines.

Ages 66–67: Full Retirement Age for Social Security

• Full Retirement Age (FRA) is when you’re eligible for full Social Security benefits. FRA depends on your birth year:
  • Born 1959: FRA is 66 years, 10 months (reached in 2025)
  • Born 1960 or later: FRA is 67.
• Claiming before FRA reduces your benefit; delaying past FRA increases it.
• Once you reach FRA, there is no longer an earned income limit for Social Security benefits. This means you can work and earn any amount without your benefits being reduced due to your earns.

Age 70: Maximum Social Security Benefit

• Waiting until age 70 to claim Social Security means you’ll receive the largest possible monthly benefit—up to 32% more than at FRA, and 54–62% more than at age 62.

Age 70 1/2: Eligible for Qualified Charitable Distributions (QCDs)

• At age 70½, you can make tax-free charitable donations directly from your traditional IRA to qualified charities through a Qualified Charitable Distribution (QCD).
• The annual QCD limit for 2025 is $108,000 per individual (or $216,000 for married couples if both qualify), and this amount is indexed for inflation.
• QCDs can satisfy all or part of your Required Minimum Distribution (RMD) once you reach RMD age, but you do not have to be taking RMDs to use a QCD.
• QCDs must come from IRAs; 401(k) or 403(b) plans are not eligible.

Age 73: Required Minimum Distributions (RMDs)

• At age 73, you must begin taking RMDs from traditional IRAs and most employer-sponsored retirement plans.
• Failure to take RMDs can result in penalties up to 25% of the amount that should have been withdrawn.
• The RMD amount is calculated annually based on your account balance as of December 31 of the prior year and your IRS life expectancy factor.

Final Thoughts

Time moves quickly—and so do the rules around retirement savings. Understanding these milestone ages and the opportunities they present will help you make informed decisions, avoid costly mistakes, and build a more secure retirement. If you’re unsure how these rules apply to your personal situation or want help creating a tax-efficient plan, please reach out to our team at Provista Wealth Advisors. We’re here to help you develop a strategy tailored to your goals.