Is Retiring At 62 Right For You?
If you are counting the days until you can retire and take social security, thinking about getting paid every month for all the years of social security taxes you have paid, this post is for you.
You will see that it is wise to strongly consider taking some time to objectively evaluate if that is really the best choice for you long term. You may not realize the price you will pay in actual dollars if you opt to take your benefits a few years early.
Take a look at how this decision can impact you!
When it comes to Social Security, it can be tempting to take the money and run as soon as you’re eligible—typically at age 62. After all, you’ve likely been paying into the system for much of your working life, and you’re ready to receive your benefits. Plus, guaranteed monthly income is nice to have.
But it can be a costly move. If you start taking Social Security at age 62, rather than waiting until your full retirement age (FRA), you can expect up to a 25% reduction in monthly benefits. Remember FRA is no longer age 65. It now ranges from 66 to 67, depending on the month and year in which you were born. (See your full retirement age .) And your annual cost-of-living adjustment (COLA) is based on your benefit. So if you begin Social Security at 62, and start with reduced benefits, your COLA will be lower too.
If you can afford it, waiting could be the better option. For every year you delay past your FRA, you get an 8-percent increase in your benefit. That’s 32% more if you delay claiming until age 70. But, make sure to evaluate your decision based on how much you’ve saved for retirement and your other sources of income in retirement. While in general many people would benefit from waiting to, say, age 70 to take payments, others may need the income sooner and may lack the resources necessary to meet expenses during the delay period, or may not live long enough to reap the rewards of delaying. – Fidelity
How Retirement Age Affects Women
Take a look at this discussion of how the choice of retirement age for social security can uniquely affect some women and how to plan to make your retirement years the best they can be.
How long should a woman plan to work? Should she prepare for a 40-hour workweek until age 65 or age 70? Should she try to work part time after that?
If a woman invests and plans sufficiently for retirement, that may not be necessary – but there are some strong reasons why a woman might want to retire later than age 62.
Ideally, Social Security would count years spent raising children and caring for elderly relatives as working years. The world is not ideal, however, and Social Security does not. It bases your Social Security income on three key factors; the age at which you claim your benefits is only one of them.
First of all, you must earn wages or have self-employment income for at least ten years to receive any Social Security benefits based on your work record. You get one Social Security credit for every $1,300 you earn in 2017, and you can receive a maximum of four credits annually. After accumulating 40 credits, you are eligible for benefits.1
Claiming your Social Security benefits well after 62 also has its merits. You probably know that if you claim benefits at 62, your monthly Social Security income will be smaller than if you wait until Full Retirement Age (66 or 67) to collect them. Additionally, your monthly benefits will increase about 8% for each year after Full Retirement Age if you delay claiming them, up until age 70. So, working longer could be a definite plus, especially if you have never married and have no option to receive spousal or widow benefits.2
The longer you work, the shorter the retirement you have to fund. If you work until age 66 and live until age 90 (which, who knows, may be the case), you have 24 years of retirement to pay for instead of 28 (i.e., if you retire at age 62).
When do you plan to retire?