When is the optimum moment to retire and begin collecting Social Security payments? This is one of the most significant questions that an American worker must address after turning 62. 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 typically chooses to retire, though many people simply resign at a convenient time without giving much thought to the actual age they have selected, which can be a mistake.
The pros and cons of collecting Social Security at every age
The first thing to consider when applying for benefits is how many years of experience you have. The Social Security Administration uses a worker’s highest 35 years of earnings to calculate benefits, so it’s crucial to have worked at least that long. Otherwise, the calculation will contain zeros, causing the amount to decrease dramatically.
If you have 35 years, you can consider retiring at age 62, which is the earliest you can receive Social Security payments. There is one little caveat: if you begin collecting benefits at this age, you will lose 30% of your payment at full retirement age, which you will never be able to recover.
Even if this appears to be a bad deal, it may be beneficial for persons dealing with health concerns or short life expectancies, as delaying the loss of benefits may be worthwhile in exchange for collecting money and ceasing work.
Another frequent retirement age is 65. This is the original retirement age before it was extended after the 1980s Social Security meltdown, and it remains the age at which a person is eligible for Medicare. Retiring at full retirement age may be advantageous for those with greater healthcare expenses due to reduced income loss (86.7% at full retirement age) and access to subsidized healthcare.
Full retirement age (67 for individuals born in 1960 or later) is the next most common retirement age. If you retire at this age, you will receive 100% of your benefits, and most workers consider it a good time to retire 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 choice, which is to delay collecting benefits until they reach the age of 70. To earn the maximum Social Security payment, you can stop working at full retirement age without negatively impacting this choice. However, you must not start receiving benefits.
The Social Security Administration increases your retirement benefits by 8% for each year you delay retirement until age 70, resulting in monthly payments of up to 124% of your retirement amount.
Even if they continue to work, many people opt out of this choice to boost compensation and improve their quality of life because Social Security is often insufficient to satisfy their needs. Given that the average payout in the United States for workers retiring at the age of 70 is $1,963.48, it is understandable that many people cannot afford to wait so 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 earn will change based on the actual age, thus, in case you are curious, these 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:- Here’s what you should never do with your monthly Social Security money – You could go broke