So much is often said about ‘social security age‘ but few people truly understand what it means and its importance. As an essential component of the public system, social security age directly affects when people can begin receiving social security benefits. Understanding this concept is therefore pivotal not just for retirees but for everyone that contributes to social security funds.
Social security age is simply defined as the age at which an individual is qualified to start receiving social security benefits that have been accrued over their working years. The earliest someone can start receiving social security retirement benefits is 62. However, claiming these benefits before the “full retirement age” directly influences the amount an individual receives monthly.
Full Retirement Age (FRA)
The full retirement age refers to the age at which a person may first become entitled to full or unreduced retirement benefits. This age varies depending on the year of birth. For instance, individuals born in 1960 or later have a full retirement age of 67. But for those born between 1938 and 1959, the FRA gradually increases from 65-67. The importance of waiting until your FRA to claim benefits is that it ensures you receive 100 percent of your accrued benefit.
While understanding social security age, it is essential to note that delaying claiming your retirement benefits until after your full retirement age can lead to a significant increase in your monthly benefits. This is due to Delayed Retirement Credits (DRCs) accrued from the full retirement age until 70.
Early Retirement and Reduced Benefits
Choosing to retire early at 62 may seem appealing, especially for those who have purchased relocatable homes in Chinderah or any other place of comfort and are eager to rest from the bustle of a lifetime of work. However, this appealing option comes at a cost. The monthly retirement benefits are significantly reduced because early retirement assumes that the benefits will be paid for a more extended period. An individual who opts to retire at 62 may only receive about 70-75% of their full retirement benefit. The percentage decreases further for those born in 1960 or later who choose early retirement.
Delaying Retirement and Increased Benefits
For individuals who can afford to delay receiving their retirement benefits until after their full retirement age, an increase in the monthly benefits awaits. This perk is a result of the Delayed Retirement Credits earned for every year the individual delays claiming benefits up until 70. For instance, someone born in 1943 or later can increase their benefits by 8 percent annually for each year they delay retirement past the FRA. Therefore, the decision to delay retirement benefits could result in more income in the long run.
However, this decision to delay should be informed by individual factors such as health, life expectancy, and financial need. For those planning to retire in their relocatable homes in Chinderah, it’s important to consider the cost of living and personal circumstances.
Conclusion
Social security age is a critical concept for every contributing individual to understand. Whether choosing to retire early, at full retirement age, or delaying retirement, each decision comes with its potential benefits and drawbacks. It’s therefore paramount to make a fully informed decision about retirement to enjoy a secure and comfortable life in places like the relocatable homes in Chinderah.