According to data from the Empower Survey Institute, running out of money in retirement is a major concern for both current retirees and potential retirees. Unfortunately, it’s a valid concern as most seniors face the risk of running out of money in retirement, especially since retirement is now so expensive.
It has become more difficult to save for the future, and most individuals fall behind their retirement savings. A Transamerica Center for Retirement Studies report showed that the average Baby Boomer has only about $152,000 saved for retirement. For most retirees, that amount wouldn’t last more than a few years.
If you are having difficulty saving for retirement, you should consider adjusting your retirement age. Retiring in any of these three ages may benefit you financially.
1. Age 62
You become eligible to claim your Social Security benefits once you hit age 62. But keep in mind that claiming early may reduce your monthly benefits compared to if you wait for a few more years. However, if your goal is to retire as early as possible, then your Social Security benefits can help you reduce the amount you withdraw from your savings.
Moreover, withdrawing from your 401(k) or traditional IRA accounts at age 62 means you won’t pay any withdrawal penalties. Usually, withdrawing from any of those accounts before you reach age 59 ½ will attract a 10% penalty. So waiting until you are above age 60 to retire is a good move.
2. Age 67
Claiming your Social Security benefits at the eligibility age of 62 may make you lose up to 30% of the benefits. To enjoy higher benefits, it is advisable to retire at the full retirement age (FRA), which is 67.
Your full retirement age is dependent on when you were born, and 67 is the FRA for individuals born in 1960 or later. This means that future retirees have to wait until age 67 to receive their Social Security benefits without any reductions.
There’s also a misconception that your benefit amount will increase once you claim early once you reach age 67, but that’s not the truth. Once you file your claims, your benefits cannot go higher; except you refund the benefits you have received and wait until you reach age 67 to make your claims.
3. Age 70
If you wait until you reach 70 to file for Social Security, you’ll receive the highest amount possible—which can give your retirement finances a huge boost. If your FRA is 67 and you wait until age 70 to file your claim, you may receive an extra 24% boost to your monthly Social Security benefit.
Delaying your benefits can be difficult, especially if you want to retire as soon as possible. But it can potentially boost your income by hundreds of dollars, which will better position you financially in retirement.
Keep in mind that you don’t necessarily need to retire at the same age you start claiming Social Security. However, if you retire first and wait a few years to file your claim, you risk draining your retirement savings. So it’s mostly advisable to file your claim the same year you retire.
Deciding the ideal time to retire is a big decision, and it requires careful planning. Retiring in any of these three ages will better position you to ensure your retirement savings last as long as possible.