You may be trying to figure out what the most beneficial age is to say goodbye to your colleagues at work. Is it 62, 65, or even 70?
Age 65 has long been considered typical retirement age, in part because of rules around Social Security benefits. In 1940, when the Social Security program began, workers could receive unreduced retirement benefits beginning at age 65.
Currently, the Social Security full retirement age is 66 for those born between 1943 and 1959, and 67 for anyone born 1960 or later.
So unless you have been stashing away cash into your retirement plans or have a current health condition that might shorten your longevity, you might be working for a few more years than initially anticipated.
Here are a few key ages to keep in mind as you get closer to retirement:
- Age 55: You may withdraw retirement plan savings without penalty if you leave your job or retire.
- Age 59½: You may withdraw money from qualified plans/IRAs without IRS penalty, as long as the plan allows.
- Age 62: The earliest age when you may begin collecting Social Security.
- Age 65: You become entitled to Medicare coverage.
- Ages 66–67: The Social Security full retirement age, depending on when you were born (see above).
- Age 70: The latest age to start receiving Social Security benefits.
- Age 72: You must start required minimum distributions (RMDs) from your retirement plans.
What happens if retire and start collecting Social Security? What impact does it make based on your age?
From a Social Security standpoint, you can start getting lower benefits as early as age 62. However, you will be receiving 25% less than the full retirement age.
Secondly, many financial experts tell their clients to put off filing for benefits as long as possible. If you delay claiming your Social Security benefits until age 70 you will receive 32 percent more than you would get at full retirement age!
When to retire is a personal decision. The best thing you can do is to talk with a financial advisor and ask them to perform a custom financial plan based on your current assets, liabilities, as well as needs, wants, and wishes.
He or she will have you fill out a detailed questionnaire so that they can better understand how you live today and how you want to live in the future.
Most advisors today use financial planning software because it provides sophisticated solutions and smart assumptions to help advisors navigate the complex financial elements of their client’s lives.