What Is the 401k Retirement Age?

Here's how the 401k withdrawal age compares with the Social Security retirement age.


A 401k account is a major component of retirement planning, but you might not know when you can start to withdraw from a 401k without being subject to penalties. Here are some tips to help you figure out when you should you begin to draw on your tax-deferred retirement plans.

When Can You Start to Withdraw From a 401k?

The 401k distribution rules focus on allowing you to access your money once you retire. You might be able to retire as early as 55 if you qualify for early retirement distributions from your 401k, but you must start taking withdrawals at age 70.5 even if you’re planning on retiring later than that.

The 401K withdrawal age is generally 59.5, however, you might qualify for a hardship withdrawal if you have incurred medical or educational expenses, are buying a new home, need to prevent eviction or going into foreclosure, or need to pay for major home repairs or a funeral. You’ll be taxed at your normal rate for an early withdrawal and pay a 10 percent early withdrawal penalty, which can significantly reduce the amount that you’ll actually be able to use for retirement.

Find Out: How to Make a Penalty-Free 401k Withdrawal

Retire Early at 55 Only If Necessary

The average 401k balance by age 55 is $177,805, according to Vanguard’s 2016 “How America Saves” annual report. But retiring at that age would be considered early.

If you plan to or need to retire early, you might be able to qualify to begin withdrawing from a 401k without penalty. You can qualify for a distribution beginning after a separation from service with your employer and made at least annually for your life or life expectancy, according to the IRS.

The Longer You Can Wait to Retire, the Better

You can begin to draw on your 401k at age 59.5, but the earlier you begin withdrawing, the more you’ll decrease your distribution rate each year because the money will need to last longer. Let your money grow as long as you can and begin withdrawing only when you need it for retirement.

Find Out: How Your Retirement Age Impacts Your Social Security Benefits

You Must Begin Taking Distributions by Age 70.5

You’re required to begin taking distributions from your 401k on the next April 1 after you reach age 70.5. The amount that you’re required to receive is based on the balance of your accounts and your age.

Consider Your Social Security Retirement Age

The amount of your Social Security retirement benefits depends on your age when you retire. If you begin receiving Social Security retirement benefits before you reach your full retirement age as defined by the Social Security Administration — full retirement age depends on your birth year — you’ll receive a reduction in benefits of as much as 30 percent. If you need to supplement your 401k or other retirement savings with your Social Security benefits to meet your living expenses before you reach your Social Security full retirement age, review your budget factoring in the reduced benefit to determine if you can cover your needs.

The longer you wait to draw on your Social Security retirement benefits, the higher your benefit will be. If you postpone drawing on Social Security until age 70, you can receive your largest possible benefit.

Retirement planning is essential to help you live comfortably once you stop working. A common place to start evaluating a retirement plan is with your 401k offered through your employer. A financial planner can help you determine how to work with your tax-deferred retirement plans and whether you need to save more, especially if you want to retire early. Review your retirement earnings on a regular basis so you can stay on track.

Keep Reading: This Is the Tax Penalty for 401k Early Withdrawal