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.

Here's when Ramsey said you can claim Social Security at 62

The question focused on whether to start retirement benefits at 62 or wait until full retirement age. In response, Ramsey said that "it usually makes sense to take it early if you're going to ... invest every bit of it."

1. You're Planning Your End-of-Life Care. Your Social Security benefits stop paying at your death, so if you die before collecting benefits, you'll have missed out on benefits entirely.

“Early retirement might look different for everyone. However, to put it simply, it is leaving the workforce and living off savings or investments at a younger age than the traditional retirement age of 65,” says Rajiv Nagaich, J.D., L.L.M.

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.

The normal retirement age is typically 65 or 66 for most people; this is when you can begin drawing your full Social Security retirement benefit. It could make sense to retire earlier or later, however, depending on your financial situation, needs and goals.

The Importance of Planning Ahead

“This is not a decision you can just shelve until you are 61,” Orman wrote. “If you haven't made plans to delay claiming your Social Security at that point, chances are you will just go ahead and start at 62. It takes planning to be able to delay starting to collect your benefit.

For instance, age 66 beneficiaries could choose to receive their payout from age 62 through age 66. According to recently released data from the SSA's Office of the Actuary, just over 590,000 retired-worker beneficiaries were receiving $1,298.26 per month at age 62, as of December 2023.

You can start receiving your Social Security retirement benefits as early as age 62. However, you are entitled to full benefits when you reach your full retirement age. If you delay taking your benefits from your full retirement age up to age 70, your benefit amount will increase.

Yes, Social Security is taxed federally after the age of 70. If you get a Social Security check, it will always be part of your taxable income, regardless of your age. There is some variation at the state level, though, so make sure to check the laws for the state where you live.

Can I draw Social Security at 62 and still work full time? ›

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.

And as of 2021, according to the Congressional Research Service, about 30% of Social Security applicants were 62.

The common definition of early retirement is any age before 65 — that's when you may qualify for Medicare benefits. Currently, men retire at an average age of 64, while for women the average retirement age is 62. Retiring before the traditional age of 65 can feel exciting and give you something to look forward to.

If you started paying into your pension at 35 and the pension is based on 1/80 of your final salary, then: retiring at 55 would give 20/80 of final salary. retiring at 65 would give 30/80 of final salary.

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.

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.