Early or Late Retirement (2024)

FAQs

Is it better to retire early or late? ›

A worker can choose to retire as early as age 62, but doing so may result in a reduction of as much as 30 percent. Starting to receive benefits after normal retirement age may result in larger benefits. With delayed retirement credits, a person can receive his or her largest benefit by retiring at age 70.

You need cash now. With the rising cost of living, you may decide to claim your Social Security benefits early. From 2008 to 2009, nearly 36% of eligible men and 39% of eligible women started claiming benefits at age 62 for one simple reason — to pay the bills.

You can get Social Security retirement benefits and work at the same time. However, if you are younger than full retirement age and make more than the yearly earnings limit, we will reduce your benefits. Starting with the month you reach full retirement age, we will not reduce your benefits no matter how much you earn.

For Social Security purposes, full or normal retirement age typically means age 66 or 67, depending on when you were born. Early retirement for you could mean retiring at 62 but it could also mean retiring at 40 if you're interested in the FIRE movement.

Retiring early also means managing healthcare costs for the long haul. Remember, if you retire before age 65, you may need to have more saved to cover medical expenses in the years before you can apply for Medicare. You'll need to pay for healthcare coverage during that time and beyond.

67-70 – During this age range, your Social Security benefit, if you haven't already taken it, will increase by 8% for each year you delay taking it until you turn 70. So, if your benefit will be, say, $2,500/month if you start at your full retirement age, it would be more than $3,300/month if you can wait.

As we have discussed, you are eligible to start claiming your benefit when you turn 62. But the benefit you receive at 62 will be permanently lower than if you wait. Every month past age 62 you don't claim your benefit entitles you to a slightly larger payout when you do start collecting your benefit.

Most financial experts recommend waiting to claim Social Security. Dave Ramsey said you can claim Social Security at 62 if you're going to invest every dollar. Most retirees can't do this, and many shouldn't even if they can, because investing money you're going to need really soon can be too risky.

The way Social Security is set up, the longer you wait to collect retirement benefits, the higher your monthly payment. Claiming benefits at age 62 means you will get the smallest possible check. Your check rises yearly past age 62 if you wait to collect.

Have you heard about the Social Security $16,728 yearly bonus? There's really no “bonus” that retirees can collect. The Social Security Administration (SSA) uses a specific formula based on your lifetime earnings to determine your benefit amount.

At what age is Social Security no longer taxed? ›

Social Security income can be taxable no matter how old you are. It all depends on whether your total combined income exceeds a certain level set for your filing status. You may have heard that Social Security income is not taxed after age 70; this is false.

According to the SSA's Office of the Actuary, retired-worker beneficiaries who were 62 years old in December 2023 received an average check of $1,298.26. As for 67-year-old retired-worker beneficiaries, the average payout was a more robust $1,883.50.

December is often selected as a favored month for retirement due to several reasons: Year-End Financial Planning: Retiring at the end of the year allows you to maximize your retirement contributions and take full advantage of any employer-matched funds for that year.

While the average retirement age for workers in the United States is 64, that number varies as a result of many factors, including your Social Security benefit, your retirement savings, any pensions you might have, and even the lifestyle you want to live in retirement.

You Have the Chance to Enjoy it Longer

Compounding this is that the stress of work can actually contribute to health issues, so if you stop working sooner, you may remain healthier longer. No longer having to work means you have time to work on yourself!

Tax management may be one reason to retire earlier in the year, or at least before the third quarter, as your total annual compensation would be less than prior years, which could potentially lower your tax bracket considerably.

Working an extra year decreases mortality rates by 11%, a new analysis shows.

Depending on the year you were born, postponing taking Social Security until age 66 or 67 will allow you to receive full benefits. Based on 2021 data, men retire at an average age of 64.7 years, while women remain at work until age 62.1. Retirees at the age of 65 qualify for Medicare benefits.

When it comes to saving for retirement, the “time is money” cliché is golden. The earlier you can start saving and investing, the better. You'll have more time to take advantage of the power of compounding. That's when your original investment generates earnings (in the form of dividends or capital gains).