7 retirement milestones every real estate agent should prepare for

Ah, retirement — the promised land of relaxation, travel and never showing a house at 2 p.m. on a Saturday. As a real estate agent, you work tirelessly to help others find their dream homes. But have you taken a moment to consider your own future?

Believe it or not, there are some big milestone ages that impact the rules that govern a successful retirement strategy. In this article, we’ll guide you through the seven age milestones every real estate agent needs to understand to navigate the path toward retirement. So, buckle up and get ready to understand the details of a real estate agent’s retirement timeline.

Milestone 1: Age 59.5 — withdrawals and freedom

Over the course of your career, you saved diligently into tax-advantaged accounts like your SEP IRA or Solo 401k, and now it’s time to savor the fruits of your labor. At age 59.5, you can officially start taking withdrawals from your retirement accounts, without incurring the 10 percent early withdrawal penalty that comes as the tradeoff to the sweet deduction you took each year on your income taxes.

Reaching this first milestone age is like adding another tool to your toolbox, and with it comes additional financial flexibility. But beware of income taxes on these withdrawals, especially if you have not retired from the real estate game quite yet. You will want to be strategic about how you use these accounts in retirement to minimize your tax liability.

Milestone 2: Age 62 — social security crossroads

The age of 62 tempts you to claim your social security benefits. But hold your horses. While it may be tempting to jump on the early benefit train, be aware of the steep haircuts your benefits will face. In fact, claiming your social security benefits at age 62 will pay you 30 percent less each month than if you would have waited until your full retirement age. 

Oh, and let’s not forget about the earned income rules. If you are still selling real estate full-time, there is a good chance that your benefit will be reduced significantly due to your earned income. It’s a delicate dance between claiming what’s rightfully yours and making wise financial moves.

In most cases, claiming Social Security at 62 only makes sense in very specific circumstances.

Milestone 3: Age 65 — health benefits at last

Finally, some reprieve from those insanely high health insurance premiums. At 65, you’re eligible for some much-needed health benefits. As a self-employed small business owner, you’ve experienced the pain of soaring healthcare premiums throughout your career. So, take a moment to breathe a sigh of relief knowing the medical weight on your shoulders may lighten a bit.

This is the time to start understanding the ABCs of Medicare. There are many options you can select to customize your price and benefits. We typically recommend consulting a Medicare expert three months in advance of turning 65, to make sure you are all set.

Milestone 4: Age 67 — full retirement, no strings attached

You’ve made it. Welcome to full retirement age (at least in the eyes of the Social Security Administration).  At 67, you can claim your full social security benefits and continue working as a real estate agent without any penalty. It’s like having your cake and eating it, too.

But just because you can, doesn’t always mean you should. For every year that you continue to delay taking your social security benefits past age 67, you receive an 8 percent bump to your monthly benefits. This fact plays a significant role in evaluating the total value of your social security benefit over your life expectancy. So, be sure to crunch the numbers before blindly claiming at 67.

Milestone 5: Age 70 — maximum benefits

At age 70, if you have been delaying your Social Security benefits, the decision has now been made for you. Delaying Social Security benefits beyond age 70 won’t further increase your benefits. There’s no reason to wait any longer. By claiming your benefits at 70, you’ve maximized your monthly payments and secured a higher lifetime payout with a long expectancy.

As mentioned earlier, you will want to consider your overall retirement savings, other sources of income and health expectations when making this choice. It can be a complex decision with large tax implications, so we recommend consulting with your financial planner to ensure you’re making the best decision for your circumstances. 

Milestone 6: Age 70.5 — SECURE Act 2.0 and charitable opportunities

Things get a little more interesting at the age of 70.5. Previously, this marked the start of Required Minimum Distributions (RMDs) from retirement accounts (we will circle back to this later). However, thanks to the SECURE Act 2.0, you now have a little more time to keep that money tucked away.

Many real estate agents I work with give generously. For the philanthropists out there, this age is an important one. Although the previously mentioned RMD age changed, the rules around one of my favorite tax planning strategies, Qualified Charitable Distributions (QCDs), remained unchanged. QCDs allow you to give directly from your IRA account to qualified charitable organizations without any tax.

Additionally, these gifts have no impact on the cost of your Medicare premiums which are dependent upon your income level in retirement. Pursuing QCDs is your chance to embrace the joy of giving while simultaneously reaping the tax benefits.

Milestone 7: Age 73 — RMD realities and tax planning

The clock strikes 73, and it’s time to face the music: Required Minimum Distributions. If you’ve diligently saved and maxed out your Solo 401k or SEP IRAs, congratulations! However, be prepared for some tax planning, too.

Every dollar withdrawn from these accounts is taxable. RMDs require you to take out approximately 4 percent per year (and that percentage increases annually). For the most efficient use of these retirement accounts, it’s in your best interest to strategize and plan for your future.

Retirement may seem like a distant dream, but understanding the key age milestones can make all the difference. From withdrawals and social security to health benefits and tax planning, each milestone brings unique considerations and opportunities.

So, real estate agent friends, embrace this knowledge, plan wisely, and navigate the road to retirement with confidence. Remember, your future self will thank you for laying the groundwork today. Happy retirement adventures await.