The Best Age to Retire: the Impact of Social Security Benefits
When should you officially retire? Well it would be great if it was when you just did not feel like working anymore. This is a difficult question to answer but one we're often posed with.
St. Augustine, FL (I-Newswire) September 18, 2013 - The importance we place on the age you retire is related in part to your Social Security benefits. Studies have shown that Social Security benefits typically only replace 40 percent or less of your pre-retirement income, leaving you with the need to draw additional income from sources such as savings, pensions, investments, and more. However, with informed planning it may be possible to collect more from social security than you dreamed was possible.
Although Social Security benefits may not cover your income needs in retirement, they do play an important role in your financial plan during this important phase of your life. Don't miss out on benefits that you may be entitled to, but just don't know about.
Deciding when you should apply for benefits is a unique choice for every person. Conditions such as your date of birth, finances, health, and marital status all play parts in determining the best time to apply for Social Security benefits. Recently, I showed a client of mine how to provide benefits to his wife that he did not know she could receive and a much higher benefit to him. He thought what I showed him was impossible. We called the social security office and got two different answers. We asked for a supervisor who gave us the correct information that I had shown him. He was very happy. Remember to verify your own information because after all you are working with a government office.
Social Security has created three retirement age categories: minimum retirement, full retirement, and maximum retirement ages. Let's look at each category.
• Minimum Retirement - According to the Social Security Administration, the minimum retirement page is 62. More than half of Social Security recipients apply for benefits at this age. Recipients receive reduced benefits for applying early. This reduction in benefits is 30 percent, on average.
• Full Retirement - According to the Social Security Administration, the full retirement age is based upon your date of birth and varies between the ages of 65 and 67. Waiting to file for full retirement means that your monthly benefits check will be 25 percent higher, on average, than had you applied at the age of 62.
• Maximum Retirement - According to the Social Security Administration, the maximum retirement age is 70. If you don't apply for benefits at your full retirement age, you can increase your potential benefits by eight percent each year until you reach the age of 70. This means that your maximum retirement benefits would be roughly 30 percent higher than if you had applied at your full retirement age, and more than 50 percent higher than if you had applied at age 62.
Which is right for you? Whatever one gives you the best benefits and sometimes that is somewhat hidden. That's a question only you can answer. According to the Social Security Administration, the average retiree who begins receiving benefits at age 62 will typically receive the same amount of money over their lifetime as if they had applied for full or maximum retirement. The person who retires at age 62 will no doubt receive smaller monthly checks, but they receive those smaller checks for a few more years than if they'd waited and applied for full or maximum benefits.
These calculations are based upon average lifespan in the United States. The Social Security Administration has calculated that the neutral point where benefits balance themselves out is between ages 78 and 82. This is using old life expectancy tables, people are living longer now and it may be a greater value to start collecting a much higher benefit at a later age. For example, women typically live longer than men do. If the applicant is a female and other women in her family have typically lived into their 80's and 90's, waiting until full or maximum retirement age could mean she receives tens of thousands of dollars more in benefits during her lifetime. If the applicant is male and other men in his family live only until their 70's, or if you have a crystal ball and know you won't live long, applying for minimum benefits at age 62 may be the best decision.
Determining your retirement age should be done with careful consideration and planning with the help of an informed financial advisor.
Although Social Security benefits aren't the only source of income in retirement, they could make the difference between a comfortable or less desirable retirement lifestyle.
About the Author
Frank Benischeck is the president and founder of Totus Tuus Consulting, Inc., a St. Augustine-based retirement and estate planning firm. Frank is one of the nation's top financial advisors, and has received the congressional committee's national leadership award. Totus Tuus Consulting can be found on the web at http://www.ttcadvisors.com
About Totus Tuus Consulting
Totus Tuus Consulting
5 Palm Row
Phone : 904-471-6444
Published On:September 18, 2013
Print Release:Print Release
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