Planning for retirement isn’t just about saving money; it’s about making informed decisions at the right time. Financial expert Rachel Cruze highlights seven key steps to secure your financial future, from maximizing contributions to understanding withdrawal rules. These choices, timed strategically, can significantly impact your retirement income and financial stability.
Maximize Savings with Catch-Up Contributions
Once you turn 50, the IRS allows increased contributions to 401(k) and IRA accounts. For 2026, IRA catch-up contributions rise to $8,600, while 401(k) accounts allow an extra $7,500 for those aged 50–63, or $8,000 for others. This is a critical opportunity to accelerate savings if you’re behind schedule or earning more now.
Strategically Roll Over 529 Funds
If your 529 college savings plan has been open for 15 years or more, you can roll up to $35,000 into a Roth IRA. This move is especially beneficial if you don’t need the funds for education. The key is timing: this option depends on when the account was opened, so evaluate early. Penalty-free withdrawals from 529 plans are also possible up to the amount of scholarships received.
Understand Early Withdrawal Rules
The standard age for penalty-free withdrawals from tax-advantaged accounts is 59 ½. However, the IRS offers exemptions. You can access IRA funds for qualified education expenses or tap into 401(k)/IRA funds if permanently disabled. Knowing these exceptions can provide financial flexibility in unexpected situations.
Optimize Social Security Benefits
You can claim Social Security as early as 62, but waiting until 70 maximizes your benefit. Financial calculators can estimate your potential payouts based on your earnings history. The decision hinges on your life expectancy, financial stability, and work plans. Consulting a financial advisor is wise.
Enroll in Medicare at 65
Medicare eligibility begins at 65, with Part A (inpatient care) usually free, and Part B (outpatient care) starting around $185/month. You can delay enrollment if you have employer coverage, but penalties may apply. Carefully consider the timing to avoid unnecessary costs.
Manage Required Minimum Distributions (RMDs)
Traditional 401(k) and IRA accounts require mandatory withdrawals starting at age 73. The IRS provides worksheets to calculate the required amount based on your balance, life expectancy, and marital status. These withdrawals are taxable, so plan accordingly.
Start Investing Early (Or Now)
Cruze emphasizes that it’s never too early or too late to begin investing for retirement. Whether you’re just starting out or nearing retirement age, consistent investment is the most important step. The power of compounding means even small contributions early on can make a substantial difference.
Ultimately, securing your retirement requires proactive planning and informed decision-making. By understanding these key milestones and acting accordingly, you can build a financially stable future.
