People choose their retirement age for a variety of reasons, and some may wonder what is the best age to begin life as a retiree. The Social Security Administration assigns each citizen what is referred to as a “full” retirement age, depending on the person’s date of birth. However, regardless of this predetermined age, you can begin drawing Social Security retirement payments as early as age sixty-two. Many people prefer to start their social security at this age, and our estate planning attorneys in Palm Desert have discovered some reasons why this option is popular:
You May Ultimately Receive the Same Lifetime Benefit Amount
Retiring at age 62 means that your benefit amount may be up to 30% less per month than if you waited until your full retirement age. However, this does not necessarily mean that you will receive less money in the long term. For example, if you retire at 62 instead of 67, you will receive a smaller amount each month, but you will collect five more year’s worth of payments, which sometimes evens things out considerably. The Social Security Administration has even stated that those who live out their average life expectancy for their age group end up collecting approximately the same lifetime benefit amount no matter when they retire.
The Need for an Income
Taking retirement early is sometimes the best course of action simply because you need the money. According to a Transamerica Retirement Survey conducted in 2018, 56% of survey participants said they “had to retire” due to family related issues, health problems, or the loss of a job that was too difficult to replace. Therefore, if you have reached age 62 and find that you need the monthly income, it makes sense to explore this option.
A Sensible Choice if You are Debt Free
On the other side of the coin, retiring early can be a good decision if you are not facing financial difficulties: if your debts are paid off or almost paid off, then you may wish to give some thought to enjoying the retirement for which you worked your whole life. If you don’t have significant financial obligations and your retirement income is in line, there is little or no reason to keep working unless you prefer to do so for personal reasons.
You Can Enjoy a Longer Retirement
Finally, a great reason to retire at 62 is because you get to enjoy a longer retirement. You will be younger than the average retired person, and perhaps more capable of participating in the activities that make you happiest. Although this is not the case for everyone, it is worth considering if you are relatively healthy and enjoy traveling, sports, spending time with grandchildren and would like more time to do such things.
The aforementioned suggestions are merely a handful of reasons why it may be wise to begin collecting your Social Security benefits early. You may wish to speak to one of our estate planning attorneys in Palm Desert for more information about the pros and cons of this option.