Turning 65 is a big milestone, and if you’re getting ready to retire, you’re probably facing a stack of paperwork and a lot of decisions. Maybe you’re considering taking Social Security based on your ex-spouse’s record or wondering if it makes sense to cash out your 401(k. You’re not alone — and you’re asking the right questions.
The truth is, small mistakes with retirement withdrawals or Social Security timing can lead to big tax bills or missed benefits. But the good news? The rules are public, and with a little planning, you can avoid the worst surprises. Let’s walk through the key things you need to know — in plain English — and help you figure out your next best steps.
Table of Contents
Rollovers
So, can you take your 401(k) money and not pay taxes at 65? Not exactly — unless you do it right.
At 65, you’ve already passed the early withdrawal penalty age of 59½, so that extra 10% fee doesn’t apply anymore. But regular income tax still does. If you cash out your 401(k) and the money lands in your bank account, the IRS considers it taxable income for the year.
The smarter route for most retirees is a direct rollover from your 401(k) to an IRA. When you do this trustee-to-trustee, meaning your 401(k) provider sends the money directly to your IRA provider, no taxes are triggered at the time of transfer. You keep the money in a tax-deferred “retirement account bubble.”
If the 401(k) sends you the check, you have 60 days to deposit it into a new IRA before it becomes taxable. Miss that window? You could be stuck with a tax bill.
A traditional IRA CD is also an option — it’s just a bank certificate of deposit inside the IRA wrapper. Interest earned stays tax-deferred until you withdraw it. If it’s a Roth IRA and meets the qualifications, your withdrawals could even be tax-free.
Here’s a quick comparison table:
| Action | What It Means | Tax Treatment | When You Pay Tax |
|---|---|---|---|
| Cash out 401(k) at 65 | Funds go to your bank | Income tax applies | Same year you withdraw |
| Rollover 401(k) → Traditional IRA | Direct plan-to-plan move | No tax at rollover; tax-deferred status | Taxes apply only when you withdraw |
| Put funds in Traditional IRA CD | Bank CD held inside IRA | Interest grows tax-deferred | Tax due when distributions begin |
Social Security
Wondering whether claiming Social Security based on your ex’s record is a better deal than your own? Here’s how it works.
If your marriage lasted at least 10 years, you’re unmarried, and you’re 62 or older, you may qualify for a divorced-spouse benefit. That amount could be up to 50% of your ex’s benefit at their full retirement age. It doesn’t reduce their benefit, and they don’t even need to have claimed theirs for you to qualify.
But if you file before your full retirement age (which for many people is 67), the benefit is reduced. So, if you claim at 65, expect a smaller check than if you waited.
One important rule to know: If you were born after January 1, 1954, the deemed filing rule applies. That means when you apply for one benefit — your own or a spousal — you’re automatically considered for the higher of the two. You can’t pick one and switch later. No more playing the delay game.
You can use the SSA’s free calculators to estimate benefits and apply when you’re within three months of your chosen start date. You can do it online, by phone, or at a local SSA office.
Advisers
Should you hire a financial adviser to help you with these choices? It depends.
If you want to avoid mistakes like triggering taxes, missing penalty-free withdrawal windows, or claiming Social Security early without realizing the long-term impact, a financial planner can definitely help.
Most certified financial planners (CFPs) charge in a few ways:
| Fee Type | Typical Range |
|---|---|
| Hourly | $150 – $450 per hour |
| Project-based | $1,500 – $7,500 total |
| Asset-based | ~1% of assets managed annually |
You can search for fiduciary advisers — those legally obligated to act in your best interest — via the CFP Board or NAPFA directories. Always check credentials and see if their style fits your needs.
Next Steps
Before making a move, run through this quick checklist to avoid common traps:
- Decide if you want to roll over or cash out your 401(k).
A direct rollover keeps the tax deferral. - If a check is sent to you, complete the rollover within 60 days.
- Consider putting funds into an IRA CD for lower-risk growth that stays tax-deferred.
- Double-check if your IRA is traditional or Roth — this affects how withdrawals are taxed.
- Review your Social Security strategy. If using a divorced-spouse benefit, confirm the marriage lasted 10 years and you’re not remarried.
- Know the deemed filing rule. You’ll receive the higher benefit but not both.
- If you’re under 59½ and need money from retirement accounts, read up on 72(t) payments and penalty exceptions.
- If confused, consider hiring a fiduciary financial planner for a one-time or ongoing review.
It’s true — taxes, rollovers, and Social Security rules can feel like a maze. But if you slow down, get the facts, and plan before acting, you can keep more of your money and avoid cleaning up financial messes later. Retirement should be your reward, not a paperwork headache. A little homework now can make all the difference.
FAQs
Can I cash out my 401(k) at 65 tax-free?
No, it’s taxable unless you roll it over to an IRA.
Do I qualify for my ex’s Social Security?
If married 10 years, unmarried now, and 62+, yes.
What is the deemed filing rule?
You get the higher benefit; can’t choose both.
How long do I have to roll over a 401(k)?
60 days if check is sent to you directly.
What’s the cost of a financial adviser?
Hourly: $150–$450; project: $1,500+; 1% AUM fees.
