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 collecting 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 basic ages at which a worker commonly chooses to retire, yet many people simply resign at a convenient time without considering the real age they have chosen, which can 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 critical to have worked at least that long. Otherwise, there will be zeros in the calculation, and the amount would decrease dramatically.
If you have these 35 years, you can start planning for retirement at age 62, the earliest you can receive Social Security benefits. There is one minor caveat: if you begin collecting benefits at this age, you will lose 30% of your payment at full retirement age, which you will never recoup.
Even if this appears to be a bad deal, it could be useful for those who have health problems or short life expectancies, because delaying the loss of benefits may be worthwhile in return for obtaining income and quitting employment.
Another typical age to retire is 65 years old. It was the original retirement age before it was raised following 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 because the loss of income is less severe (you will receive 86.7% of your benefit at full retirement age) and you will receive subsidized healthcare.
The second most popular retirement age is 67, which applies to people born in 1960 or after. If you retire at this age, you will receive 100% of your benefits, and most workers believe it is a good age to quit working because you have enough years to enjoy life and are in good 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 can stop working at full retirement age without jeopardizing this choice, but you must never begin collecting benefits in order to obtain the maximum Social Security payment.
This is because the Social Security Administration boosts your retirement benefits by 8% for each year you delay retiring until age 70, resulting in monthly Social Security payments that are up to 124% of your retirement income.
Many people skip this option even if they continue to work in order to increase their benefits and enhance their quality of life, as Social Security frequently fails to meet basic needs.
Given that the average benefit in the United States for workers retiring at age 70 is $1,963.48, it’s understandable that many people can’t afford to wait that long to receive their benefits.
In any case, one can retire at any time between the ages of 62 and 70, and the proportion of benefits they will get will change depending on the age; hence, in case you are curious, the percentages a worker can receive are as follows:
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: – Here’s what you should never do with your monthly Social Security money – You could go broke