Retirement Savings: Mix and Match Is Often Best


“Put as much as you can into tax-deferred retirement accounts.” That in a nutshell is the conventional wisdom on retirement savings. But if you do blindly follow this advice, you often give up a certain amount of control. Find out what we think is the best way to think about retirement savings in this Navigator article I recently wrote. And then take a look at the following retirement milestones, so retirement does not “sneak up” on you, like it does on many people.


Age 40s, 50s and 60s: Accumulate savings via tax-deferred, tax-exempt, and taxable investments.

Age 55: If you leave your job or retire, you can start withdrawals from 401(k)s without a 10% penalty; withdrawals are taxed as regular income.

Age 59 ½: Can start withdrawals from IRAs with no 10% penalty. Withdrawals taxed as regular income.

Age 62: Earliest you can collect Social Security benefits. But if you collect early, benefits will be roughly 30% less.

Age 62: Retiring early? You’ll need health insurance to close the gap before  Medicare begins at 65. Consider  extending your employer coverage  through COBRA, coverage under your working spouse’s plan, or purchase private medical insurance.

Age 65: Enroll in Medicare within 7 months of your birthday (starting three months before you turn 65). If you  miss this window, you may have higher premiums for your lifetime. Revisit your plan choices during Open Enrollment each fall, to make sure you’ve got the coverage best for you.

Age 66-67 (depending on year of birth): Social Security full retirement age.

If you defer filing, your benefits will increase 8% annually until age 70.

Age 70: File for Social Security if you haven’t yet. Your benefit won’t increase beyond age 70.

Age 70 ½: Required Minimum Distributions (RMDs) begin from all of your non-Roth retirement accounts (regular IRAs, 401(k)s, etc.). Required annual withdrawals are based on your age and account balance, and there’s a stiff 50% penalty on the amount of any shortfall. Also, even if you’re still working, you can no longer contribute to retirement accounts. For more on RMDs, read this post by LNWM’s Brian Whitaker.