Have you been considering claiming your social security benefits when you reach the age of 62? If so, there are some compelling reasons why you probably shouldn’t. Consider the facts of the situation before you make the decision to file for your Social Security benefits at the earliest possible time. It could make your golden years more prosperous by holding off.
How age affects Social Security numbers
The amount of money that you earn in your life time has a major part in determining the total amount of Social Security benefits you will be awarded when you start claiming your retirement. You are not required to file for Social Security benefits when you turn 62. You can delay filing for benefits and it could boost your Social Security income by 8% per year all the way up to the age of 70. It’s important for you to be aware of the fact that claiming your benefits early, or at the age of 62 reduces the amount of money that you receive by a percentage that is figured for each month that you file early. If your full retirement age is 67 and you can have a reduction of up to 30% if you file at age 62.
Why people file early
The most common age for seniors to file for their Social Security benefits is the age of 62. Even though there are financial drawbacks some feel that they have no alternative because of their ability to find gainful employment, forced retirement trends and for others, it comes down to their impatience for retirement and leaving the work world.
Sobering facts about early retirement
Retirement years can be expensive. While some believe that their expenses will go down, this is not usually the case. Even though commuting to and from work is no longer an issue, the amount of monthly income also goes down. You’re still going to pay the same amount during retirement as you previously did for your utilities, food, auto insurance, mortgage payment, and other monthly expenses.
The trend for longer life expectancy increases the chance that you’ll live longer on less than what you really need to get by. Filing at age 62 when your full retirement can reduce a benefit amount of $1,500 down to $1,050. This is a significant reduction in monthly income that in many cases, can be avoided. If you live to the age of 90 and you retire at the age of 67 versus retiring at age 62, over the course of your lifetime during retirement, you could end up bringing in up to $61,000 more than if you had taken the early retirement option.
What could you do with the extra cash?
Before you make your final decision about the best age to retire, it’s advised that you take into consideration the potential that you will live for many years beyond your life expectancy. Think about how much your monthly expenses are going to be during retirement. There are certain circumstances that make taking early retirement the only and in some cases the best option. If you’re in poor health and your outlook for a longer life is bleak, taking early retirement may be precisely what you need to do. Everyone’s life circumstance is different, but it pays to examine your current and likely future situation before making this very important decision.
Filing for Social Security benefits is a life event that many seniors who have spent their entire lives working look forward to. It’s not a decision that should be taken lightly. Filing early, at the age of 62 can mean the loss of tens of thousands of dollars in retirement income over your lifespan if the prospects of living a long life are good. It’s nice to have the option of filing early and for some people it makes good sense while for others, waiting until full retirement age is a better option. Consider your unique personal situation and take the time to investigate all aspects of your retirement years before you make your final decision. It’s a big step and it signals a major life change and the choice that you make today could impact your financial future years down the road.