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Important Things to Consider When Planning for Retirement
Starting Your Retirement Benefits Early
You can start receiving your Social Security retirement benefits as early as age 62. However, you are entitled to full benefits when you reach your full retirement age. If you delay taking your benefits from your full retirement age up to age 70, your benefit amount will increase.
If you start receiving benefits early, your benefits are reduced a small percent for each month before your full retirement age.
To find out how much your benefit will be reduced if you begin receiving benefits from age 62 up to your full retirement age, use the chart below and select your year of birth. This example is based on an estimated monthly benefit of $1000 at full retirement age.
Full Retirement and Age 62 Benefit By Year Of Birth
Are you still working?
If you plan to continue working while receiving benefits, there are limits on how much you can earn each year between age 62 and full retirement age and still get all of your benefits.
Once you reach full retirement age, your earnings do not affect your benefits.
- After you reach full retirement age, we recalculate your benefit amount to give you credit for any months you did not receive a benefit because of your earnings.
- When additional earnings appear on your record, we check to see if they will increase your monthly benefit. If they do, we will send you a letter telling you your new benefit amount.
- You can apply for just Medicare at age 65 and start receiving retirement benefits later.
What is your life expectancy?
When you think about retirement, be sure to plan for the long term.
Since Social Security first began paying monthly Social Security benefits in 1940, life expectancies have changed. The life expectancy for men reaching age 65 on April 1, 2021, has increased more than 6 years to age 84. For women reaching age 65 on April 1, 2021, life expectancy has increased nearly 7 years to age 86.6.
You must consider your family history and lifestyle when thinking about your life expectancy. If you come from a family with a long life expectancy, you may need extra money in later years. This is particularly important if you may outlive your pensions or annuities, especially any with limits on how long they are paid.
Your life expectancy affects your retirement planning decisions. Knowing this, helps you determine whether you should start receiving your benefits at age 62, or wait until age 70 to receive a higher payment.
Will you have health insurance?
If you stop working, not only will you lose your paycheck, but you may also lose employer-provided health insurance. Although there are exceptions, most people will not be covered by Medicare until they reach age 65.
Your employer should be able to tell you if you will have health insurance benefits after you retire or if you are eligible for temporary continuation of health coverage. If your spouse is employed, you may be able to switch to their health insurance.
Should I apply for Medicare?
Remember, Medicare usually starts when you reach age 65.
If you decide to delay starting your benefits past age 65, be sure to go online and file for Medicare.
You will need to apply for Original Medicare (Part A and Part B) three months before you turn age 65. If you don’t sign up for Medicare Part B when you’re first eligible at age 65, you may have to pay a late enrollment penalty for as long as you have Medicare coverage.
Even if you have health insurance through a current or former employer or as part of your severance package, you should contact them to find out if you need to sign up for Medicare. Some health insurance plans change automatically at age 65.
Are you eligible for benefits on someone else’s record?
If you are eligible on another record, you may have additional options:
- If you qualify for benefits as a widow, widower, or surviving divorced spouse on another record, you may choose to apply for survivors benefits now and delay your retirement benefit until later.
If you delay receiving your retirement benefit until your full retirement age or later, your retirement benefit will be higher.
- If you were born before January 2, 1954, and have already reached your full retirement age, and are eligible for a spouse’s or divorced-spouse’s benefit and your own retirement benefit, you can choose to receive only the spouse’s benefit and delay receiving your retirement benefit until a later date. If your birthday is January 2, 1954, or later, the option to take only one benefit at full retirement age no longer exists. If you file for one benefit, you will be effectively filing for all retirement or spousal benefits.
Do you have other income to support you if you decide to delay taking your social security benefits?
If you don’t need your benefits now, you may decide to:
- Wait beyond full retirement age to receive delayed retirement credits.
- Choose early retirement and increase the value of your benefits by investing them instead of spending them.
Reminder: If you’re receiving early retirement from your employer, keep in mind that some company pensions include a Social Security-equivalent supplement that stops automatically at age 62.
The supplement stops because they assume you will apply for your retirement benefits at age 62.
Will other family members qualify for social security benefits on your record?
When you start receiving Social Security retirement benefits, some members of your family also qualify to receive benefits on your record.
If they qualify, your spouse or child may receive a monthly payment of up to one-half of your full retirement benefit amount. These payments will not decrease your retirement benefit.
If you decide to delay your benefits until after age 65, you should still apply for Medicare benefits within three months of your 65th birthday. If you wait longer, your Medicare medical insurance (Part B) and prescription drug coverage (Part D) may cost you more money.