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What's the deadline for signing up for Medicare? When can you take your savings without a penalty? When is a good time to apply for Social Security? As you gear up for retirement, don't miss these major calendar events.
Important milestones on your path to retirement
There are 7 important dates to remember as you approach retirement. You won’t find these dates on any calendar. But it’s worth keeping up with them as your retirement gets closer.
Age 59½? Skip the 10% federal penalty tax.
Maybe you haven’t celebrated a half-birthday since you were a kid. But age 59½ may be worth a small party.
Why? Well, after you hit age 59½, you can take money from your retirement plan without owing an early withdrawal penalty.*
Why? Well, after you hit age 59½, you can take money from your retirement plan without owing an early withdrawal penalty.*
*Some exceptions to the 10% tax penalty (for people younger than age 59½) include distributions made after death, after permanent and total disability, under a divorce agreement, or to pay unreimbursed medical expenses that exceed 10% of adjusted gross income.
Vanguard does not provide individual tax advice. You should discuss your situation with your tax advisor.
HELPFUL HINT
You will owe federal income taxes on withdrawals from your retirement plan. That’s why it’s a good idea to set aside some of the money for taxes.
Age 62: Eligible for reduced Social Security
This is the earliest age at which you can claim regular Social Security retirement benefits. However, there is a substantial cost to doing so. For example, someone whose full retirement age is 66 would have their monthly benefit check reduced by 25% for life by starting retirement benefits at age 62.
Age 64¾: Enroll in Medicare
Medicare is our country’s basic health insurance program for anyone age 65 or older, as well as many people with disabilities. Most people enroll in traditional Medicare, which has three parts:*
Part A: Pays for inpatient hospital care
Most people receive Part A hospital insurance at no cost when they reach age 65. You qualify for it automatically if you’re eligible for Social Security retirement benefits.
Part B: Pays for doctor visits and outpatient care
Part B is optional. Almost anyone who is eligible for Part A can sign up for Part B medical insurance, but it is not free. The monthly premium depends on your income.
Part D: Pays for prescription drugs
Anyone who has Medicare Part A or B can sign up for Part D (prescription drug coverage). Prescription coverage is optional, and you will pay a monthly premium. As with Part B, the premium charged varies by income.
*Alternatively, some people enroll in Medicare Part C, also known as a Medicare Advantage Plan. A Medicare Advantage Plan offers the basic coverage of Part A and Part B and often some extra services, but with a limited number of health care providers
HELPFUL HINT
The initial Medicare sign-up window is open for seven months. If you miss it, you may have to pay higher premiums for life. However, if you still have medical insurance provided by an employer, including your spouse’s employer, you can postpone enrolling until that coverage ends without facing higher premiums.
Age 65: Medicare begins; consider Medigap
If you enrolled in or are receiving Social Security, you qualify for Medicare coverage starting on the first day of the month in which you reach age 65, regardless of whether you have retired.
The six-month enrollment window for Medicare supplemental insurance (also known as Medigap) also begins the first day of the month in which you reach age 65. Medigap is private insurance that covers some of the out-of-pocket co-pays and deductibles of traditional Medicare.
The six-month enrollment window for Medicare supplemental insurance (also known as Medigap) also begins the first day of the month in which you reach age 65. Medigap is private insurance that covers some of the out-of-pocket co-pays and deductibles of traditional Medicare.
HELPFUL HINT
During this enrollment window, you cannot be denied Medigap coverage or charged extra because of poor health. If you miss it, however, you may pay higher premiums for life or even be denied coverage.
Ages 66–67: Social Security full retirement age
This is the age when, if you’re already receiving benefits, you’re no longer penalized for continuing to work.* However, if you wait to claim your benefit, its value will continue to increase each month you delay until you reach age 70. Your full retirement age depends on the year you were born.
You can find your full retirement age by using the Life Expectancy Calculator at the Social Security Administration website.*
You can find your full retirement age by using the Life Expectancy Calculator at the Social Security Administration website.*
Source: Social Security Administration.
*When you visit this site, you will be leaving our site. Vanguard is not responsible for the accuracy of information on third-party sites. Vanguard receives no remuneration for website links.
Note: Although the full retirement age is rising, you should still apply for Medicare benefits three months before your 65th birthday. If you wait longer, your Medicare premiums may be higher unless you are still covered by your employer’s (or your spouse’s employer's) health care plan.
*When you visit this site, you will be leaving our site. Vanguard is not responsible for the accuracy of information on third-party sites. Vanguard receives no remuneration for website links.
Note: Although the full retirement age is rising, you should still apply for Medicare benefits three months before your 65th birthday. If you wait longer, your Medicare premiums may be higher unless you are still covered by your employer’s (or your spouse’s employer's) health care plan.
Age 70: File for Social Security if you haven’t yet
Don’t put off filing for Social Security retirement benefits past age 70. At this age, your benefits won’t increase by postponing them. But if you have waited this long, your benefits may now be nearly one-third higher than if you had claimed them at your full retirement age.
Age 73: Begin required minimum distributions
Many savers reduce taxes by making pre-tax contributions to a 401(k) during their working years. But you can’t just sit on your plan savings forever. By law, you must take taxable withdrawals from your account beginning no later than April 1 in the year after you reach the age for required minimum distributions (RMDs). If you don’t, you could owe a penalty of up to 25% of the amount you were required to have withdrawn from your account.
In most cases, you'll need to start taking distributions at age 72 if you reached that age before 2023. Starting January 1, 2024, Roth accounts won't be subject to RMDs. This means that money taken from your Roth account won’t count toward your RMD.