One of the most crucial concerns that an American worker will face once they reach the age of 62 is when is the optimum time to retire and begin receiving Social Security benefits. While the economic answer is evident in terms of immediate gain, everyone has a different solution that is appropriate for their situation.
There are four primary ages at which a worker often decides to retire, however many people just resign at a convenient time without giving any thought to the actual age they have selected, which may be a mistake.
The pros and cons of collecting Social Security at every age
Before even considering collecting benefits, one must first determine how many years of employment they have completed. The Social Security Administration considers a worker’s greatest 35 years of earnings for computing benefits, thus it is essential to have worked at least that long. Otherwise, there will be zeros in the computation, and the amount would decrease dramatically.
If you have these 35 years, you may begin planning for retirement at the age of 62, which is the earliest you can claim Social Security payments.There is one little caveat: if you begin receiving benefits at this age, you will forfeit 30% of your payment at full retirement age, which you will never recover.
Even if this seems to be a poor bargain, it might be beneficial for persons coping with health concerns or short life expectancies, since postponing the loss of benefits may be worthwhile in return for receiving cash and ceasing employment.
Another typical age to retire is 65 years old. It was the original retirement age until it was raised during the 1980s Social Security meltdown, and it remains the age at which a person is eligible for Medicare. For individuals with greater healthcare costs, now may be a good time to retire since the loss of income is less severe (you will get 86.7% of your benefit at full retirement age) and you will receive subsidized healthcare.
The second most common retirement age is 67, which applies to people born in 1960 or after. If you retire at this age, you will get 100% of your benefits, and most workers believe it is a good age to quit working since you have enough years to enjoy life and are in excellent health.
Of course, there is a third alternative that few people are aware of and that is out of reach for the majority of low-income workers unless they have no other choice, which is to delay collecting benefits until they reach the age of 70. You may quit working at full retirement age without jeopardizing this choice, but you must never begin collecting benefits in order to obtain the maximum Social Security payout.
This is because the Social Security Administration boosts your retirement benefits by 8% for each year you postpone retiring until age 70, resulting in monthly Social Security payments that are up to 124% of your retirement income.
Many individuals forego this choice even if they continue to work in order to boost their benefits and improve their quality of life, since Social Security is often insufficient to cover basic expenses. Given that the average benefit in the United States for workers retiring at 70 is $1,963.48, it’s reasonable that many people can’t afford to wait that long to receive their benefits.
In any event, one may retire at any time between the ages of 62 and 70, and the proportion of benefits they will get will vary based on the particular age, thus, in case you are wondering, below are all the percentages a worker can receive:
Age % of retirement benefit
62 70%
63 75%
64 80%
65 86.7%
66 93.3%
67 100%
68 108%
69 116%
70 124%
Also See: How Long Does It Take to Pay Off a Student Loan? The Surprising National Average
