Social Security is the economic foundation for millions, as many Americans have relied on it to cover their retirement expenses. However, more than half of Americans who benefit from this insurance are unaware that the age at which they decide to retire directly affects the amount they will receive each month from that point on. So, we are here to guide you and get the most out of your income. Who doesn’t want a comfortable and worry-free retirement? We’ve worked hard enough!
How important is age in the amount of money you receive?
You didn’t know? It’s very important! It’s the key to optimizing all your income! The minimum age to retire is 62 years old, this is the minimum age that the State allows you to start collecting your pension payment. However, this age has a “bad trick”, if you decide to retire at 62 (the so-called early retirement), we regret to tell you that the amount you receive will be reduced by up to 30%!!
This means that each month a little will be withdrawn until it reaches 30% less. Each month before your full retirement age (FRA) will be reduced from the total amount.
But there is “good” news, it is that if you wait until you are 70 years old (even if it is many years working) you could increase your benefits by up to 32%. This is because the administration wants to thank you for those extra years that you will be working in some way, so this increase can make a big difference in the financial stability you have during your retirement.
We are going to apply it in another way in the case that during all the years that you have worked you have received and paid all the taxes that correspond to you if you retire at 62 years of age the average amount that you receive per month will be 1,298 however if you wait until you are 70 years old to retire, the amount you receive can be as high as $2,038 per month! The difference is $740 each month (almost $1,000 extra) just for having worked three more years after full retirement age.
Which is the best option, to wait or not?
It is clear that $740 is a lot of dollars each month. But, although extending these benefits is financially speaking the best option, it is not always the best strategy, since it will depend on several factors and on each individual.
For example, not all individuals will have the same health or the same life expectancy, so if it is a job that does not involve physical effort, it may be a good idea to wait to receive full payment. If we are talking about construction workers, bus drivers, machinists or similar jobs that involve great physical effort, it may be a better option to stop in time.
On the other hand, if we are talking about savings, those people who have additional savings will be able to delay their retirement age without compromising their quality of life.
Finally, it will also depend on the lifestyle of each person and it is each individual who has to decide when to stop their working life, because perhaps, even if they “lose” money, they need that break.
What is the best strategy?
Before making a decision, the first thing you should do is evaluate your financial needs, since only you know them.
Another option we suggest is that you consult with a financial advisor who can help you make this decision, since it is important that you know all the possibilities before you decide anything. So, whether you decide to wait to retire or start collecting your pension early, the important thing is that you are satisfied with your decision and that it is in line with your personal needs.
Rest easy, you’ve earned it!