Social Security and Retirement Account Milestones: The Ages That Actually Matter

Retirement planning comes with a surprising number of birthdays to track. Two matter more than the rest: the age you become eligible for Social Security, and the age you can pull from your retirement accounts without a penalty. Get the timing wrong on either one, and it can cost you real money. Here is what to know about both.

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10/2/20262 min read

The second milestone involves your 401(k) or IRA, not Social Security.

In most cases, you can begin withdrawing from retirement accounts penalty-free at age 59½. Pull money out before that, and you will owe a 10% early-withdrawal penalty on top of ordinary income tax.

There are exceptions. If you leave your job in or after the year you turn 55 (age 50 for certain public employees), you can start taking distributions from that employer's retirement plan without the 10% penalty, even before 59½.

Then there is a milestone at the other end of the timeline. Starting in 2026, Required Minimum Distributions, or RMDs, kick in at age 73. The IRS requires withdrawals from most retirement accounts from this point forward, calculated using your life expectancy and the account balance as of the end of the prior year. Skip an RMD, and the tax penalty is steep. (Note: this 73 threshold applies to people who reach that age in the 2023 to 2032 window; the RMD age is scheduled to rise to 75 for those born in 1960 or later, beginning in 2033. Your specific age bracket determines which rule applies to you.)

Why these dates matter together

These two milestones do not operate in isolation. Claim Social Security too early and you lock in a smaller check for life. Pull retirement savings too early and you hand over a chunk to penalties and taxes. Wait too long on RMDs and the IRS penalizes you for the opposite mistake.

The right sequence depends on your income needs, your health, your other savings, and your tax situation in a given year. There is no single answer that works for everyone, which is exactly why this is worth a conversation with a financial or tax professional rather than a guess.

Have questions about how these milestones fit into your retirement plan? Reach out to Spearpoint and we will help you think through your options.

This information is provided as general information and is not intended to be specific financial or tax guidance. Pursuant to IRS Circular 230, it is not intended to provide specific legal or tax advice and cannot be used to avoid penalties. Before you make any decisions regarding your personal financial situation, you should consult a financial or tax professional to discuss your individual circumstances and objectives. This material is not endorsed or approved by the Social Security Administration or any other Government Agency. The source(s) used to prepare this material are believed to be true, accurate, and reliable, but are not guaranteed.

Sources:

Social Security Administration, "Retirement Benefits: Delayed Retirement." https://www.ssa.gov/benefits/retirement/planner/delayret.html
Social Security Administration, "Full Retirement Age Chart." https://www.ssa.gov/benefits/retirement/matrix.html
Charles Schwab, "Retiring Early? 5 Key Points About the Rule of 55." https://www.schwab.com/learn/story/retiring-early-5-key-points-about-rule-55

Social Security eligibility

You can start collecting Social Security retirement benefits as early as age 62. There is a catch, though: claiming that early locks in a permanently reduced monthly benefit, up to 30% less than you would receive at full retirement age.

Full retirement age depends on when you were born. If you were born between 1943 and 1954, it is 66. For anyone born in 1955 or later, the age ticks up gradually and lands at 67 for those born in 1960 or later.

Here is the part worth sitting with: if you delay benefits past full retirement age, your monthly payment grows by up to 8% per year, all the way until age 70. After 70, that growth stops. There is no added benefit to waiting any longer, which makes 70 the latest age where delaying still pays off.