The old adage about timing being everything in life is true when you begin to wind down your career, as well. Many look forward to the day when they'll be able to hang up their gloves, their smock, their suit and sit on the beach. Unfortunately many also rely on Social Security benefits to be there for them when they retire and to be sufficient to support them. While there are questions about the future viability of Social Security at this point, it is also true that you want to maximize your benefits. Here are a few things to understand about getting the most bang for your buck.
Don't Stop Working Too Early!What happens if you stop working now, before you are eligible for benefits? While your benefits won't be smaller when you do reach retirement age and file a claim, the amount available for benefits won't get larger either. This is due to the way that your Social Security benefits are compiled. Your benefits are based on your 35 best earning years
, so if you quit now you can't increase your total. Should you earn, in some year in the future, more than you did some other year in the past then the year with more income would replace the old year. This will increase your benefit calculation! Also, if you aren't earning anything and you don't have 35 years of earnings, those years with no earnings could bring your total down.
You have the option to retire at 62, which is termed early retirement. The catch is that you will receive reduced benefits! By retiring early, your benefit is reduced by a fraction of a percent for each month before full retirement age
. The same is true for SS benefits to your spouse, too. Your retirement age is based on when you were born (see the table in the link above). If you were born after 1960, for instance, your retirement age is 67. So after you reach 67, you will be eligible to receive full benefits
The Good and the Bad
Remember that whether you retire early or late, you are still have the same TOTAL amount of money available for retirement. Retiring early reduces the amount you get monthly, not the total amount you will eventually collect. When you retire early the total amount is just spread over more time, hence a lower amount.
Of course, it is all about time and, not to be depressing, but how much time you have to collect the benefits. If you retire early, you get to collect reduced benefits over a longer period of time and may collect more of your total benefits. You have to decide what is best for you and your situation.
Some Additional ConsiderationsOne additional thing to consider is that you may qualify for delayed retirement credits
by waiting until full retirement age to make a claim. These benefits can increase your monthly check considerably!
You have to also consider if you have other income, from a wife that still works, a side job, or other sources. For instance, if you choose early retirement, the Social Security Administration will reduce your benefits according to how much you earn from a job over their annual limit ($17,040.00 in 2017). Once you reach full retirement age, in your birth month, you can work as much as you like and nothing is subtracted from your benefits.
If you have questions, there are various calculators and "Frequently Asked Questions" pages at the Social Security Administration Website
, or you can call for help in making the correct choice for your situation.