You can retire as early as age 62 and receive benefits the rest of your life. However, the age at which you choose to retire is a very important consideration and can have a substantial impact on how much money your receive each month. Consider these possibilities:
- Full Retirement Age — Age 65. The current Full Retirement Age will gradually increase to age 67. The formula is designed so that if you have average earnings throughout your working life and retire at the Full Retirement Age, the benefit you receive in your first year of retirement will equal approximately 42 percent of what you earned in the year just before your retired. No matter what your earnings, the maximum benefit you can receive at retirement is determined by the Social Security law. The maximum amount changes from year to year.
- Early Retirement — If you start your Social Security benefits as early as age 62, the benefits amount you receive is permanently reduced because of the longer period over which you will be receiving payments. You would continue receiving the lower amount even after you turned 65. Should you choose to retire at age 62, you cannot apply for Medicare until age 65. It is important to make sure you have health care coverage up to age 65. If you retire early because you cannot work due to poor health, you should consider applying for Social Security disability benefits. The amount of disability benefit is the same as a full retirement benefit.
- Delayed Retirement — If you decide to retire later than your Full Retirement Age, you can increase your benefit in two ways:
- Each added year of work adds another year of earnings to your Social Security record. Higher lifetime earnings could result in higher benefits once you do decide to retire.
- Your benefit will be increased by a certain percentage if you delay retirement. These increases will be added automatically from the time you reach your Normal Retirement Age until you start receiving your benefits, or until you reach age 70.
- If you decide to delay your retirement, be sure you sign up for Medicare at age 65. In some circumstances, medical insurance costs more if you delay applying for it.
