Social Security retirement benefits play a significant role in budgeting for retirement for many people. If you are one of those, you may be wondering at what age you should retire and start accepting your benefits. Because it does matter, let’s see how the age at which you begin accepting Social Security retirement benefits impacts your benefit amount.
The Social Security Retirement System
Throughout your working years you accumulate credits based on your earnings. The Social Security Administration keeps track of your earnings throughout your lifetime. In 2021, you get one credit for every $1,470 you earn, up to a limit of four credits per year. The amount you need to earn to acquire a credit increases slightly each year. Once a credit is earned it remains on your record forever. If you were born after 1929, you need 40 credits to receive Social Security retirement benefits. Consequently, you must work a combined total of 10 years over the course of your lifetime to be eligible for Social Security retirement benefits. You do not have to work 40 consecutive quarters – you just need to have a total of ten years, or 40 quarters, worth of work history to be eligible for benefits.
At What Age Can I Retire?
The issue is not at what age can you retire, but at what age should you start collecting Social Security retirement benefits. You can, of course, stop working at any age you choose. The earliest age at which you can begin receiving Social Security retirement benefits, however, is age 62 and the latest is age 70. You may choose to begin anywhere in that eight-year span; however, many people choose to delay the start of their retirement benefits until they are older than 62 years old because the longer you wait to start getting payments the larger your monthly payments will be when you start receiving them – and they will stay at that rate forever.
How Much Will I Receive in Social Security Retirement Benefits?
Your monthly benefit amount will depend on things such as the age at which you begin receiving benefits and your earnings during the time prior to retirement. You can find out how much you have paid to date as well as get an estimate of what your benefit will be by navigating to the Social Security Administration’s website. In addition, the Social Security Administration (SSA) mails out a summary of your benefits each year, about three months before your birthday or you can request a statement at any time by calling the SSA (800-772-1213) and asking for a form SSA-7004 or by downloading the form from the SSA website. Your statement provides a record of your earnings history, the number of credits you have accumulated to date, and an estimate of the retirement benefits available if you wait until full retirement age. There is a maximum retirement benefit amount that changes each year. To be eligible for the maximum benefit amount, however, you would have had to earn the maximum taxable earning amount for at least 35 years.
At What Age Should I Retire?
If you retire early, your retirement benefit amount will be reduced and if you retire after your designated retirement age your benefit amount will be increased. By way of example, if you were born in 1959, meaning you will turn 62 in 2021, your retirement benefit amount would be reduced by 27.5 percent if you retire in 2021, at age 62. Conversely, your retirement benefit amount is increased by 8 percent for every year you delay receiving benefits, up to age 70. For most people, that means your benefit amount could be increased by 24 percent by retiring at age 70 instead of age 67. Keep in mind that the increase in your benefit amount will remain with you for the rest of your life.
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