Timing your retirement is tricky. If you retire too early, your monthly social security checks are smaller and you risk running out of funds. On the other hand, working too long could have health consequences and prevent you from pursuing the activities you have been putting off until you have the time. At Solivita Living, we recommend that you approach this question by first determining your full retirement age.
How Will the Timing of Your Retirement Affect Your Social Security Benefits?
The retirement age of 65 only applies to those born before 1937, which means they would be at least 83 or 84 years old by now. People born after 1937 but before 1960 reach full retirement age at 66 while those born in 1960 or later reach it at 67. The term full retirement age means that the Social Security Administration (SSA) will reduce benefits for anyone who claims retirement before that age. You should also know that the SSA will deduct payments from your paycheck if you continue to work part-time in retirement.
The SSA stresses that these rules are not to punish anyone for retiring early. People have longer lifespans than they did when social security first came out, and the SSA has had to adjust for making payments for longer timeframes by adjusting the full retirement age. You can expect 75 percent of the benefit you would have received if you retire at age 62, and that payment will remain for the rest of your life. Early retirement also affects your spouse since he or she would receive only 35 percent of your benefits if you retire early compared to 50 percent normally.
Can You Afford To Retire?
When timing your retirement, consider whether you could afford to keep the same lifestyle if you had to rely only on social security payments and retirement savings. If retiring now means you would need to sell a car and downsize, you may want to put it off for a few years. However, you can certainly choose to retire early if you feel comfortable with any lifestyle changes you would need to make. Here are some steps to help you decide if you can afford to retire and when you should do it:
- Start by estimating your total annual expenses. Your budget should include regular monthly payments like rent or mortgage and utilities along with occasional expenses like car repairs or dental work.
- Calculate all sources of potential income in retirement. Be sure to compare what your social security benefit would be at various ages between 62 and 67.
- After looking at these figures, create a realistic scenario of how much you would withdraw from retirement savings accounts each month. You will need to pace yourself to ensure you do not run out of money once you are no longer working.
- Seek help from a financial professional if necessary. Keep in mind that you have never retired before and will not be an expert at financial planning. Getting input from a professional can be extremely helpful.
Thinking About Moving In Your Retirement? Contact Solivita Loving Today
Solivita Living is a specialty realty company serving the 55+ retirement community in Central Florida, one of the leading areas in the country to retire. Please reach out to learn more about our properties.