In the US, if you want to retire and get a pension under Social Security, then the minimum age for this has been fixed at 62 years. That is, any person who has worked for a sufficient period of time and has contributed under Social Security can apply to receive his monthly pension at the age of 62.
But is it the right decision to retire at 62? Can it cause any harm? Can you get more pension by waiting? If you have such questions in your mind, then you are not alone. Thousands of American citizens are confused about what age it would be best to retire.
In this article, we will know what is the minimum age related to retirement in the US, what is the full retirement age, and what benefits are likely to be received if you retire late.
Retirement at the age of 62:
62 years of age is the minimum age to receive Social Security benefits. That is, after this age, any eligible person can request a monthly payment from the SSA (Social Security Administration). However, a major effect of retiring so early is that your monthly pension is permanently reduced.
For example, if your full retirement age is 67 years and you retire at 62, you will get a pension reduced by about 30%. And this reduction will be applicable for life, it cannot be increased later.
What is Full Retirement Age (FRA)?
Full retirement age (FRA) is the age at which a person can receive 100% of Social Security benefits – that is, the pension he should get based on contributions, without any reduction.
This age is based on the year of birth:
- If you are born in 1960 or later, your FRA will be 67 years.
- If you were born in the decade before 1955, your FRA could be 65 to 66 years and a few months.
- A chart is available on the SSA’s official website, which clearly shows the FRA according to each birth year.
Benefits of retiring late: Bonus and higher pension
If you retire after your full retirement age (such as 67), the SSA gives you an additional 8% of your benefits every year as a bonus. This benefit is available till the age of 70. After this, the bonus stops.
For example:
- If your FRA is 67 and you retire at 70, you will get about 24% more pension.
- This increase remains applicable throughout your life.
- So, if your financial condition is good and health is also supporting you, then waiting till 70 can prove to be a smart decision.
Best age: depends on your personal circumstances
What age is best for retirement? There is no one sure answer. It depends entirely on the individual’s circumstances:
Situation advice
If you have no other income, applying at 62 may be a practical decision
If you have good savings or a pension, you can wait until 67 or 70
If you are unwell or have a short life expectancy, retiring early may be beneficial
If you have a long life expectancy and income, waiting until 70 may provide long-term benefits
The SSA also provides an online calculator to estimate the amount of pension you will receive at different ages.
Importance of the Retirement Age Chart
The SSA’s Social Security Retirement Age Chart is very important. It tells you what is the full retirement age of each person and how much reduction he may face if he applies before that.
This chart helps you decide:
- How much pension you will receive?
- How much deduction will you face?
- What age will be most beneficial for you?
- Does early retirement prove to be bad everytime?
No, this is not always evil. It happens at times that individuals are forced to retire early because of reasons relating to their personal and family commitments or, even illnesses. In such a situation, taking benefits at age 62 may be practical.
But if you have alternative income sources and you can work for a few more years, then waiting may be a wise decision.
Conclusion:
So is it right to retire at age 62? The answer is – it depends on your personal situation. Before retirement, you should consider the following points:
- How is your financial situation?
- Do you have alternative income sources?
- How is your health and life expectancy?
- Do you want to receive the full amount of Social Security?
- Do you want to earn more in future or do you require cash here and now?
Think about all these facts and then make the decision.
The SSA site’s tools and calculators should help, but consulting with a financial advisor may be helpful too.
FAQs
1. What is the earliest age I can retire in the U.S.?
A. You can start receiving Social Security retirement benefits as early as age 62, but this is considered early retirement and may reduce your monthly benefit amount.
2. Can I retire before age 62?
A. Yes, you can technically retire at any age, but Social Security and Medicare benefits won’t be available before age 62 and 65, respectively. You would need personal savings or private retirement income.
3. What is the Full Retirement Age (FRA)?
A. Your Full Retirement Age depends on your birth year. For most people today, it’s between 66 and 67. Retiring before FRA results in reduced Social Security benefits.
4. How much are benefits reduced if I retire early?
A. If you claim Social Security at age 62, your benefits may be permanently reduced by up to 30% compared to waiting until your FRA.
5. Is it better to retire early or wait?
A. It depends on your health, financial needs, and goals. Retiring early gives you more free time but lower monthly benefits, while waiting increases your payout.
