Retiring At 62 Versus 65


How To Retire Comfortably At 62

Social Security at 62 vs 65

The key to retiring at 62 is to assess your current assets, estimate future income and preferred lifestyle, including whether youre willing to work part-time, and how youll pay for healthcare until Medicare kicks in. While 65 is the traditional age to retire and start getting Social Security payments, many Americans want retire earlier, if possible. A financial advisor can help you put a financial plan together for retirement, regardless of what age you want to do it by.

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Reason #: Retire Early If You Have A Plan For Health Insurance

When you retire at 62, there are still 3 years left to wait before youll qualify for Medicare unless you qualify for disability. Youll need medical coverage to see you through until you turn 65.

Being healthy doesnt mean its OK to go without health coverage. If you can obtain a private policy to bridge the gap, then youre all set. If not, you might want to wait a bit longer to retire.

Here are a few ideas for how to afford healthcare before Medicare eligibility.

Your Monthly Social Security Benefits Increase The Longer You Wait To Claim

While you can collect Social Security benefits as soon as you turn 62, taking benefits before your full retirement age will spell a permanent reduction in your payments of as much as 25% to 30%, depending on what your full retirement age is.

If you wait until you hit full retirement age to claim Social Security benefits, youll receive 100% of your earned benefits. But you can do even better by waiting to claim your Social Security benefits at age 70 your monthly Social Security benefit will grow by 8% a year until then. Any cost-of-living adjustments will be included, too, so you dont forgo those by waiting. Think of that time as bonus earning years and remember that youd be hard pressed to find those sorts of gains for zero risk during that period anywhere else.

Waiting to claim your Social Security benefits can help your heirs as well. By waiting to take her benefit, a high-earning wife, for example, can ensure that her low-earning husband will receive a much higher survivor benefit in the event she dies before him. That extra income of up to 32% could make a big difference.

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No One Else Is Relying On Your Benefits

In the event of your death, a surviving spouse, minor or disabled child can receive money from the Social Security Administration based on the amount of your benefits. For example, a surviving spouse can receive between 71.5% and 100% of your benefit amount, depending on the surviving spouses age. A disabled child can receive 75% of your benefits each month even after youre gone.

If no one else can qualify for benefits based on your record, you might want to retire early because no one is depending on that money. If everything else falls into place and you meet the minimum Social Security retirement age, consider collecting your benefits early and enjoying life.

Reason #: Retire Early If You Are Ready To Focus On A Financial Goal

Should You Retire at 62 or Work a Few More Years?

Maybe you arent quite financially ready to retire early. Should this hold you back? Absolutely not. Especially if you are ready to focus on a financial goal.

Most Americans are unprepared for retirement and may need to continue working during their 60s and beyond. However, dont let past mistakes of lack of planning and saving hold you back now!

Set a goal to retire early, start analyzing your finances and design a plan to get out of the workforce as soon as you can. The sooner you make an effort to retire early, the sooner you will be able to do it.

The NewRetirement Planner makes it easy to get started. Try different scenarios and find your path to retirement as early as possible.

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How Are Your Social Security Benefits Calculated

Social Security uses your highest 35 years of earnings, indexed to a national average wage index, to calculate your primary insurance amount If you have fewer than 35 years of earnings, each year with no earnings will be entered as zero. You can increase your Social Security benefit at any time by replacing a zero or low-income year with a higher-income year.

There is a maximum Social Security benefit amount you can receive, though it depends on the age you retire. For someone at full retirement age in 2022, the maximum monthly benefit is $3,345. For someone filing at age 70, the maximum monthly amount is $4,194. And for someone retiring early, at age 62, the maximum monthly benefit is $2,364.

To estimate your benefits, use the Social Securitys online Retirement Estimator.

Is An Annuity Right For Me

Annuities can provide guaranteed income for your life. And they offer security through a set monthly income which can increase annually if you are eligible for a Cost-of-Living Adjustment . However, flexibility is not a feature of annuities. Once you set it up, an annuity doesnt allow you to change the income amount. Once you begin receiving monthly payments, you cannot cancel the annuity.

With annuities, you take money out of market risk and use it to give yourself a monthly lifetime income. Annuities are the only investment withdrawal option that guarantee you will not outlive your account balance.

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At What Age Do Most People Retire

The average retirement age of 62 was Gallups highest in 20 years of monitoring retirement trends. Even in pre-pandemic 2019 and 2020, the average retirement age was 61. However, the expected retirement age in 2021 was 64 years lower than in previous years: 66 in 2020 and 65 in 2019.

What is the average retirement age in 2020? The average retirement age in the United States is 62 years for retirees and 64 years for current employees. The full retirement age is 67 for those born after 1959. The retirement age is lowest in Alaska and West Virginia, where people retire. on average 61.

Find Your Social Security Full Retirement Age

Should you retire at age 62? [More on social security to consider.]

You can claim your Social Security benefits a few years before or after your full retirement age, and your monthly benefit amount will vary as a result. But first you have to know what it is.

Also known as normal retirement age, your Social Security Full Retirement age is the age at which youre entitled to 100% of the Social Security benefits youve earned. FRA is 66 for beneficiaries born between 1943 and 1954 it gradually increases to 67 for beneficiaries born in 1960 or later. If you take benefits before FRA, your benefits will be reduced. If you file at age 62, for example, benefits will be as much as 30% lower. More on that in a moment.

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How Do You Know You Are Ready To Retire

You feel like work is in the way You might want to start a business, travel more, or spend time with your family. Feeling like work is getting in the way of your personal goals is a clear emotional signal that you’re ready to retire. It’s a sign that your priorities and values are beginning to shift.

Average Retirement Age By State

Where you live can impact your retirement age due to available employment opportunities, healthcare needs and the cost of living.

In general, southern states like Alabama, Georgia and South Carolina have a lower average retirement age than the national average. By contrast, states in the Northeast such as Connecticut, New Hampshire and Massachusetts have higher average retirement ages.

A MoneyTalksNews survey from 2019 looked here are the U.S. Census Bureaus American Community Survey to determine the average retirement ages by state. Heres what they found:


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When Do You Break Even

If you are considering taking a lower benefit earlier than at full retirement age, one of the things you would probably like to know is how many years it will take before the higher benefit at full retirement age would be greater in terms of total benefits collected. This is generally referred to as a “break-even analysis”. For example, if one’s full retirement benefit would be $3,033 per month at age 67 , but you are considering taking the 70% benefit of $2,125 per month available at age 62, at what age would you break even? Likewise, if one chose to wait until the maximum age to start taking benefits and get a monthly benefit of $3,770 , at what age would you break even on the total collected payments.

There are a few ways to do this type of analysis. For this article, I chose to use Excel so that I could produce some charts to show the break-even concept visually. The chart below shows the break-even results under the assumption of the SS payments being spent, deposited into a no interest checking account, or stuffed into a mattress. In other words, no investment returns on SS payments.

It is possible to push out the age at which you break even if you can invest all or a portion of the early SS benefit payments. The chart below shows the break-even analysis under the assumption of investing the paid benefits at a real return of 2%.

At What Age Does The Average Person Retire

Ask Larry: Can My Wife File At 62 And Later Get Full Social Security ...

Although the average retirement age is 61, most people cannot claim full social security benefits before the age of 67 . In addition, you will not be able to receive Medicare until the age of 65.

What age do most adults retire?

Although the average retirement age is 61, most people cannot claim full social security benefits before the age of 67 . In addition, you will not be able to receive Medicare until the age of 65. Thus, there may be many different definitions of retirement age!

How much does the average person have when they retire?

According to this study by the Transamerica Center for Retirement Studies, the average retirement savings in the United States by age are: 20-year-old Americans: $ 16,000. 30-year-old Americans: $ 45,000. 40-year-old Americans: $ 63,000.

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What If I Delay Taking My Benefits

If you retire sometime between your full retirement age and age 70, you typically earn a “delayed retirement” credit for your own benefits . For example, say you were born in 1960, and your full retirement age is 67. If you start your benefits at age 69, you would receive a credit of 8% per year multiplied by two . This means your benefit would be 16% higher than the amount you would have received at age 67.

Early Benefits Can Still Pay Off

However, taking early benefits can still pay off despite the reduced monthly check. But youll want to be sure you budget for a reduced benefit.

No one can predict how long youll live, but if youre facing a potentially significant reduction in life expectancy and are short of income, taking Social Security early may be appropriate, Neiser says.

Married women are also good candidates for claiming early benefits because they are likely to outlive their husbands. Those widows then become eligible to receive the greater of either their benefit or their late husbands benefit.

However, this scenario works only if the husband does not claim his benefits early. By not claiming early benefits, the husband effectively increases the monthly benefit his wife eventually receives. So, youll want to calculate how filing early will affect your spousal benefit here.

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Retiring At Age 65 Or Earlier

The original rules surrounding Social Security benefits established age 65 as the retirement age when workers could receive unreduced retirement benefits. In 2022, the Social Security full retirement age is 66 for those born between 1943 and 1959, and 67 for anyone born in 1960 or later.

An individual’s retirement savings, health benefits, and social security commonly dictate the best time to stop working and vary by age.

Whats Your Social Security Break

Social Security at Age 62 vs. Medicare at 65 – 5 Insurance Options

If youre looking to maximize your total lifetime Social Security payout, youll want to conduct a break-even analysis to determine when you should start drawing your benefits.

Your break-even age occurs when the total value of higher benefits starts to exceed the total value of lower benefits .

For example, if you are eligible to collect a reduced $900 benefit at age 62 plus 1 month, and your benefit would increase to $1,251 at age 65 and 10 months, your estimated break-even age is 75 years and 5 months.

If you expect to live beyond that age, it could make financial sense to delay drawing benefits. The Social Security Administrations life expectancy calculator can help you decide.

When it comes to calculating a start date for Social Security benefits, however, theres not an age thats appropriate for everyone. Consider your own financial needs, health and other retirement plans before making the call. If you cant reasonably afford to live without taking benefits, it may make little sense to delay taking your benefit.

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Effect Of Delaying Retirement Benefits

1Represents Full Retirement Age based on DOB January 2, 1960

2PIA = The primary insurance amount is the basis for benefits that are paid to an individual

That higher baseline would last for the rest of your retirement and serve as the basis for future increases linked to inflation. While it’s important to consider your personal circumstancesâit’s not always possible to wait, particularly if you are in poor health or can’t afford to delayâthe benefits of waiting can be significant.

Be aware that if you decide to wait past age 65, you may still need to sign up for Medicare. In some circumstances your Medicare coverage may be delayed and cost more if you don’t sign up at age 65. If you start Social Security benefits early, you’ll automatically be enrolled into Medicare Parts A and B when you turn age 65.

Your annual Social Security statement will list your projected benefits between age 62 to 70, assuming you continue to work and earn about the same amount through those ages. If you need a copy of your annual statement, you can request one or view it online on the Social Security Administration portal.

What Happens If You Start Collecting Social Security At 62

You can start receiving social security benefits at the age of 62. However, you are entitled to a full retirement age when you reach full retirement age. If you start receiving benefits early, your benefits will be reduced by a small percentage each month before your full retirement age.

Can I claim Social Security at age 63?

For the sake of clarity, you are allowed to apply for social security at the age of 63. In fact, you can do this as early as age 62, and its no surprise that this is the most popular age for claiming benefits. If you were to claim social security at the age of 63 and a full retirement age of 66, you would lose about 20% of your monthly benefit.

How much Social Security does a 63 year old get?

Monthly social security contributions are reduced if you register at the age of 63, but less than if you apply for payments at the age of 62. An employee who earns $ 1,000 a month at age 66 would receive $ 800 a month at age 63, which is 20% of their salary. If your full retirement age is 67, you will receive 25% less when you register at the age of 63.

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How Much Do You Lose By Retiring At 65

62-year-old: 30 percent. 63-year-old: 25 percent. 64-year-old: 20 percent. 65-year-old: 13.3 percent.

What percentage do I get if I retire at 65?

If you start collecting benefits at age 65, you could receive about $ 33,773 a year or $ 2,814 a month. Thats 44.7% of your last years income of $ 75,629.

How much money do you lose if you retire at 65 instead of 66?

65-year-old: 13.3 percent. 66-year-old: 6.7 percent.

Average Retirement Age By Race

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White Americans tend to have more assets at retirement than Black or Hispanic Americans.

Just 35% of Hispanic families and 41% of Black families have savings in a 401 or IRA account, according to the Economic Policy Institute .


Despite the lack of savings, minority groups are more likely to retire at earlier ages.

While the Federal Reserve research above didnt identify average retirement ages by race, it did report that 56% of Black people and 65% of Hispanic people retired at the age of 61 or earlier, compared to less than half of white retirees.

Common reasons for the earlier retirement age were health problems, having to care for family members and lack of available work.

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Does Working After Full Retirement Age Increase Social Security Benefits

Working after full retirement age could increase your Social Security benefits. Your benefits are based on average wages over your 35 highest-earning years .

Even after you’ve reached full retirement age, and even if you’ve already claimed benefits, the Social Security Administration continues to recalculate your average annual wage to account for new income. If your earnings after FRA are higher than previous years and raise your average wage for your 35 top-earning years, your benefits could rise accordingly.

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