We often hear from clients that they are staying in the workforce longer than they expected to. While 65 used to be a target age for retirement, many Americans are finding themselves still healthy and able to stay employed (US News and World Report, "Why More Americans Are Working Past Age 65"). Staying in the workforce ensures a steady stream of income, there may be other financial incentives to put off retirement. If you're nearing retirement age, here are some different factors to think about:
1. Social security benefits vary depending on your age and birth year.
The amount received in Social Security benefits may be higher if you wait longer to retire. The Social Security Administration has raised the full retirement age so that you may only receive a fraction of possible benefits if you retire early, say at 62 or 63, rather than waiting to your full retirement age. The SSA has a quick chart that can help figure out the difference in benefits depending on retirement age: Social Security calculator. Once you reach age 60, you should receive a statement from the SSA describing your potential benefits, but the information can also be found on the SSA website. To check what your benefits would be, you can create a profile on the SSA's website, at Create an SSA account.
2. Since you may get less social security by retiring early, if you are fully employed, it may make sense to wait to retire.
After consulting the SSA calculator, you may find that even at retirement age, your current income is much higher what your monthly benefits would be. Additionally, your benefit allotment may be less than what it would be in a few years. And most importantly, if you enjoy your job, you may be happier working rather than retiring.
3. If you're working part-time, or in financial trouble, it may make sense to retire as soon as you are eligible for social security.
If you are eligible for retirement and start to collect social security, your social security benefits could be reduced if you earn over a certain amount annually. Additionally, if your income is only part-time or if you are not employed, it may make more financial sense to start collecting unemployment. Getting less per month by retiring early is better than going into debt due to lack of income.
4. Once you're ready to apply for benefits, the process should be easy.
There are several ways to start collecting unemployment. You can do it over the phone or online at www.ssa.gov, or you can go into a local SSA office. You will be asked to provide certain documents to establish eligibility, such as your social security card, birth certificate, and a recent W-2 or tax return. You can also provide bank information to have the benefits automatically deposited, or you can receive your benefits to a special card provided by the SSA.
