While we tend to think of age 65 as a good starting point for retirement – probably due to Medicare eligibility, which begins at 65 – the truth is that not everyone is ready to retire at the same time. Some of us want or need to retire earlier, whereas others end up retiring quite a bit later. Luckily, Social Security rules reflect reality, and you can claim your benefits across a range of time periods based on what works best for you.
In fact, you can claim your benefits at any time between age 62 and age 70. And while your benefit amount will be reduced if you claim it early, it can actually grow if you want past your “full retirement age” (66 or 67, according to Social Security rules). For each year that you wait beyond full retirement age, your future benefit amount will grow.
So how does that break down, for the average person? Why wait beyond age 66 or 67 to retire? Not everyone wants to wait for retirement any longer, but for those who do, they can reap two main benefits.
More time to save. As we regularly remind our readers, Social Security is not intended to fund your entire retirement. You should be saving money in a retirement account, regardless of when you plan to retire. And while a few years might not seem like such a big deal, many of us are at our peak earning potential toward the end of our careers. So, if you’re maxing out your retirement plan contributions, you could put back a significant chunk of money between age 67 and 70.
Larger Social Security checks. For each year that you wait beyond full retirement age, your Social Security benefit will grow by 8 percent. And it’s important to remember that once you retire, your monthly Social Security amount is set for life unless you withdraw your claim. If you’re worried about the potential for inflation in the future, or simply want to save for a more roomy budget in retirement, waiting a few years can make a significant difference to your overall monthly income.
Of course, waiting until age 70 to file for Social Security is not desirable or even possible for everyone. And that’s okay! What matters most is that you choose a retirement date that works for you. Give us a call, and we can help you put together a retirement plan that suits your preferences and financial ability.