Before you start planning your retirement in Munster and dream about sleeping in or taking beach vacations, it is important that you understand how the age at which you retire will affect your financial livelihood. At Harvest Social Security QA, one of the questions that we get asked most by our clients is in regard to whether or not there is a legal age of retirement. The answer is that there is no “legal” age, but the age at which you retire will affect your Social Security benefits. Here’s what you need to know:
As stated above, there is no “legal” age of retirement. In fact, you can retire at whatever age you want, assuming you do not have a contract with your employer prohibiting you to do so. Of course, you should make sure that when you retire, you have worked long enough to claim your pension (if you have one), and that you have earned enough work credits to claim Social Security retirement benefits. Currently, a person needs 40 work credits in order to be able to retire.
While you can retire whenever you want, you cannot claim Social Security benefits until you reach age 62. This is something to think seriously about – if you retire before age 62, will you be able to support yourself financially before you are eligible to receive Social Security benefits? How much more could you earn and save by continuing to work for one, two, or five (or more) more years?
While you can start collecting your Social Security benefits at age 62, there’s a catch: if you claim your benefits before you reach your full retirement age, your monthly benefit amount will be reduced in order to offset the different.
Your full retirement age is dependent upon the year that you were born. For example, if you were born in 1960 or later, the full retirement age is 67. This means that you cannot receive 100 percent of your earned Social Security retirement benefit unless you wait until age 67 to claim it. You can use the Social Security Administration’s retirement age calculator to find your full retirement age.
A plus to the full retirement age system is that if you wait to claim your benefits until after you reach full retirement age, your monthly benefit amount will increase for each year after your full retirement age up until age 70, at which point the increase is capped. This means that if you wait to claim benefits until age 70, you could potentially receive thousands of dollars more overtime than you would have if you started claiming benefits early.
When you decide to retire is a very personal decision, and there are a lot of factors to think about. Your ability to afford your costs of living when you are no longer working is one of the biggest. At Harvest Social Security QA, we can help you to learn more about Social Security and retirement age, and how to maximize your benefit amount. To learn more, sign up for one of our free Social Security workshops near Munster today.
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