When is the ideal time to start collecting and retire?One of the most significant problems an American worker will have to address after turning sixty-two is how much they will receive in Social Security. Everybody has a different solution that will make sense for them and their situation, even though the economic answer is obvious from the standpoint of immediate gain.
There are four primary ages at which employees typically decide to retire, yet many people make the mistake of retiring at a time that works for them without giving their selected age much thought.
The pros and cons of collecting Social Security at every age
How many years of job experience a person has is the first consideration before even considering receiving benefits. It is crucial to have worked for at least 35 years since the Social Security Administration takes into account a worker’s highest 35 years of earnings when determining payments. If not, the computation will contain zeros, and the sum will decrease dramatically.
You can begin considering retirement at age 62, the earliest you can begin receiving Social Security payments, if you are 35 years old.One little disclaimer: if you decide to begin receiving benefits at this age, you will forfeit 30% of your benefits at full retirement age, and you will never be able to recover the money.
Even though this may seem like a bad deal, people with health conditions or short life expectancies may find it helpful to postpone the loss of benefits in exchange for receiving paid and ceasing employment.
65 is another common age at which people quit their jobs. It is still the age at which a person is eligible for Medicare and was the original retirement age before it was raised following the Social Security crisis of the 1980s.Given that you will get subsidized healthcare and a less severe income loss (86.7% of your benefit at full retirement age), this may be a favorable time for people with greater healthcare costs to retire.
The full retirement age, which is 67 for anyone born in 1960 or after, is the next most common retirement age. The majority of workers believe that this is a good age to retire since it gives them enough years to enjoy life and stay healthy. If you retire at this age, you will collect all of your benefits.
Of course, there is a third alternative—delaying benefits until age 70—that few people are aware of and that most low-income workers cannot afford unless they have no other option. You can stop working atfull retirement ageand that will not affect this option negatively, but you must not, under any circumstances, start collecting benefits in order to receive themaximum Social Security payment.
This is because theSocial Security Administrationincreases your retirement payments by 8% for each year you delay retirement until age 70, which means that your monthly payments you receive fromSocial Securitywill be up to 124% of your retirement benefit.
Many people forgo this option even if they continue to work to have increased payments and have a better quality of life, as many timesSocial Securityis not enough to make ends meet. Considering that the average benefit in the USA for workers retiring at 70 is $1,963.48, it is understandable why many cannot afford to wait that long to collect a benefit.
In any case, one can retire at any point between 62 and 70, and the percentage of benefits they will collect will vary depending on the exact age, so, in case you are curious, these are all the percentages a worker can receive:
Age % of retirement benefit
Sixty-two percent
63 75%
64 80%
65.7%
66 93.3%
67 percent
68 108%
69 116%
70 124%
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Eliot Pierce is a dedicated writer for ChiefsFocus.com, covering local crime and finance news. With a keen eye for detail and a passion for storytelling, Eliot aims to provide his readers with clear and insightful analysis, helping them navigate the complexities of their financial lives while staying informed about important local events. His commitment to delivering accurate and engaging content makes him a valuable resource for the community.