In my father’s day and age, this wasn’t even a question. It was 62, then 65, and now?? Well, now depending on when you were born, you have a different “full retirement age” according to the Social Security Administration. Leave it to the Federal government to complicate things. If you look through the Social Security Administration’s website, it is loaded with detailed information to help you determine when the best age for retirement is “just right” for you.
Many people think that you can’t retire until your “full retirement age,” or that at your “full retirement age” you must retire. That’s just hogwash! I like to keep things simple.
You can retire at any age between 62 and 70. The difference is in the amount you will receive each month – the earlier you retire, the less you receive each month. Does that mean you will lose benefits because you retire early? No, because you will receive them for more years and therefore your “life-time” benefits will theoretically be the same. Of course, this is all based on actuarial calculations. (I hope we all beat the system and live longer.) What if I work part-time and I start my Social Security payments before my “full retirement age?” Will I lose benefits? In the short term, your monthly social security payments may be reduced if your annual gross earnings exceed $25,000 ($32,000 if married). However, once you reach your “full retirement age,” your monthly payment amount is recalculated and “credits” for what you weren’t previously paid are considered when calculating the new amount. Again, your average life-time benefits should theoretically be about the same. You can have fun with the estimator that the Social Security Administration provides on the web. Just go to www.socialsecurity.gov/estimator/ The estimator allows you to create different scenarios of how much your monthly social security payment will be depending on when you retire and how much you earn each year up to retirement. For example, if a “full retirement age” monthly benefit were $1,000 and you elect to retire at age 62, your monthly payment would be $750. If you deferred retirement to age 70, your monthly payment would be $1,320.
One final note, when considering when to retire, regardless of when you want to start collecting social security payments, don’t forget to enroll for Medicare at age 65. (Actually, 3 months before your 65th birthday!)
Keep those letters coming, folks. Send your ideas to: The Frugal Forum, P.O. Box 693, Huntley, IL 60142 or by email to: thefrugalforum@gmail.com.
