Are you nearing the age of retirement? If 65 or 67 seems like a long way off before you can collect Social Security, consider drawing your benefits at age 62. Some people may tell you that this is a bad idea and that you should wait. However, this isn’t always the case. While there are valid arguments on both sides, in some cases collecting early Social Security is a smart choice. Freedom Debt Relief reviews some of the benefits of collecting your Social Security at age 62.
Start Enjoying Retirement Earlier
If you have some savings already for retirement, and a huge bucket list of things you’d like to do once you retire, you may want to consider “going for it”. Granted, each year you put it off, you’ll earn a little more money, but is the amount significant enough in your situation to make a big difference? Freedom Debt Relief reviews how this scenario could look for you.
If you start collecting at age 62 instead of 65, your payments will be about 30 percent less. So, if you are scheduled to collect $2,000 a month at age 65, you’d receive $1,400 a month at age 62. In some cases, $600 a month could make a big difference; however, this isn’t the case with everyone. If you’ve put away money diligently in a 401K or retirement savings for many years, you will also have those funds to draw on since you are already past the penalty age for these accounts. So, in this example, the $600 a month that you would not receive for retiring early may not make as much of an impact on your lifestyle.
Will I Receive as Much Social Security if I Retire Early?
The answer to this really depends on how long you live. Freedom Debt Relief reviews of lifetime benefits reveal that those who live an average life expectancy generally receive the same amount of benefits whether they retire early or later. Let’s look at this further.
As we mentioned, your payments are reduced by 30 percent when you retire early. However, when you delay retirement, your payments are increased by eight percent for every year that you delay it. So, using our same example, the person who would receive $2,000 a month at age 65 would get $2,800 a month at age 70. That is double the amount they’d receive by retiring at age 62.
At first glance, this seems like a no-brainer. Delay and receive twice as much. However, by waiting, and even delaying retirement, you will miss out on all those payments – 36 of them for those retiring at age 65, and 96 payments if you wait until you turn 70. Granted they are smaller monthly payments, but Freedom Debt Relief reviews show that they add up to around the same amount over the average lifespan.
Should I Retire Early?
Again, the decision is ultimately up to you to make. If you are healthy and happy working at your current job, then you may not even want to consider it just yet. But if you are nearing the age of 62 and are looking forward to starting the next phase of your life, then you probably won’t miss out on any Social Security money in the long run by retiring early.
However, Freedom Debt Relief reviews of retirement age reveal that it is best to have your finances in order before you make this move. Figure out how much money you will have to live on between your retirement accounts and Social Security, and make sure it is enough to at least cover your living expenses. And if you have any outstanding debt, you should work to eliminate this first before you decide to retire.