Many people grapple with the decision of when to retire. Wrapped up in that decision is a related question: When should you start collecting Social Security? You can start collecting as early as age 62 or as late as age 70.
The most common age when people choose to start receiving their monthly payments is 62. About a third of retirees, 34.3%, start then, while the next most common age, 66, is chosen only by about 18%. You might want to join the crowd and start at 62, too, as there are some good reasons to do so.
1. Retirement can be even better than you imagine
The first reason is this: Retirement can be even better than you expect. You may only be imagining not working -- not getting up early every day, not having to put on your work clothes, not enduring your commute, not receiving your regular paycheck, and so on.
Spend a little time thinking about what retirement will be like instead of what it won't be like -- and dream big. After all, if you can retire relatively early -- such as at age 62 or within a few years of that -- you can partake in more retirement activities and enjoy them longer because you likely will be in better health and more active than later in life. If you want to work on your golf game, establish and maintain a big garden, restore a classic car, or hike through Europe, it will be easier to do when you're 65 than when you're 75.
Speaking of health, you can probably improve and maintain it much more effectively if you retire early. The stress of your old job will be gone, and your body may get the longer sleep sessions that it needs. You'll have time to prepare nutritious meals and go for long walks, bike rides, hikes, or visits to the gym. If you can lose any excess weight you're carrying, you'll likely benefit in many ways, such as being at less risk of developing diabetes or high blood pressure. The healthier you are, the longer you'll likely live, too -- making your retirement even longer!
You even can be productive if you want. For instance, you can still work and make money in retirement. A part-time job that's enjoyable or at least less stressful than the job you retired from can generate some extra dollars and make your nest egg last longer. If you like your current job, you might even be able to stay there, working fewer hours for a few years.
It's actually good for many people to work some in retirement, as jobs offer the structure and socializing that some folks find they miss in retirement. If you work just 10 hours per week -- perhaps two five-hour shifts -- and earn $12 per hour, you're looking at almost $500 per month in additional income, which might cover some big budget items, such as food and/or utilities.
If you're financially secure, you might volunteer as many hours as you'd like for causes or organizations you believe in. Or if you have an entrepreneurial bent, you could try starting a new business -- perhaps tutoring or doing freelance editing.
2. Collecting Social Security early can be smart
You're probably going to rely on Social Security for a significant chunk of your retirement income, and you may be planning to delay starting to collect Social Security in order to end up with fatter checks. It's true that you can delay starting to collect your Social Security benefits until age 70, and the longer you wait, the fatter those checks will be.
Indeed, for every year beyond your full retirement age that you delay, up to age 70, your benefits will increase in value by about 8%. Delay from age 67 to 70, and you can make your checks 24% bigger. If you would have started collecting $2,000 per month ($24,000 per year) at 67, you instead can start with $2,480 per month (or nearly $30,000 annually).
That can make it seem like a no-brainer decision to delay collecting for as long as possible. But hold on -- because you're forgetting that, if you delay collecting from age 67 to 70, you'll miss out on three years' worth of checks -- that's 36 checks. So yes, your ultimate benefit checks will be larger, but there will be fewer of them. For the average retiree, whether you start collecting at age 62, 67, or 70, could actually be a wash.
Of course, if your family members tend to live into their 90s and you're still enjoying your job, it can make sense to delay starting to collect. If there's a good chance that you'll live an average-length life, though, starting to collect your benefits early makes plenty of sense.
You also can maximize your Social Security benefits by being strategic -- especially if you're married. For example, if you and your spouse have had rather different earnings histories, you might start collecting the benefits of the spouse with the lower lifetime earnings record on time or early while delaying collecting the benefits of the higher-earning spouse. That way, you get some income earlier, and when the higher earner hits 70, they can collect extra-large checks based on their earnings. Also, should that higher-earning spouse die first, the surviving spouse can collect that bigger benefit.
As the saying goes, you only live once. On top of that, most of us don't know how long we'll live. It's natural just to assume you'll live a long life, but many end up shortchanged in years. According to the Social Security Administration, "A man reaching age 65 today can expect to live, on average, until age 84.3" and "A woman turning age 65 today can expect to live, on average, until age 86.6." Those are just averages, with plenty of people living shorter lives than that.
By retiring early, you can enjoy as many work-free (or low-work) years as possible. If you work until age 70 or later, you're rolling the dice on how good a retirement you'll have.
Don't assume that retiring early and collecting Social Security at 62 are not for you. If your retirement war chest isn't as big as it needs to be, you may be able to make some smart moves now (while avoiding common retirement blunders), and make your retirement happen sooner.
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