As people live longer, the full retirement age is going up. A bunch of people are opting to work as long as possible to enjoy the maximum Social Security benefit and to increase their retirement income down the road.

Social Security Retirement Age

According to the Social Security website, the earliest that anyone can qualify for Social Security benefits is at the age of 62. You are eligible to receive Social Security benefits anytime between the age of 62 and the full retirement age. For people born after before 1960, full retirement age is considered 65. For people born after 1960, full retirement age is 67. Full retirement age is when you are eligible to receive 100% of your benefits.

The Con of Taking Early Retirement Benefits

Taking retirement benefits early seems great, but it does affect the dollar amount of benefits that you will receive. Your benefits would be reduced a fraction of a percent for each month before your full retirement age – that means a lower monthly payout amount. This can make a sizeable monthly difference for someone who claims benefits as soon as they turn 62.

The Pro of Taking Early Retirement Benefits

The advantage of taking the benefits early is that you would start receiving payments immediately. Your monthly payment amount will be lower than if you waited until full Social Security retirement age, but you would receive payments for a longer period of time. The net effect could be the same. It may be a toss up, so if you are considering taking benefits early, take a look at the different payout amounts that you would receive and how it would affect your finances.

My Take

I think that this post will only help someone older than 50 as of 2011. I have no idea if Social Security will be around for the rest of us or what the rules will be by the time it would matter. I am 28 and seriously doubt if any of the Social Security rules will be the same in 40 years.

Don’t misunderstand me, I haven’t given up. If our government tries to take away my future benefits, I will throw a fit. I will contact whoever I can to fight. I am getting great at sending emails and letters. But I don’t believe that I will have to pay into a plan that will not be able to help me at all. I am an optimist.

That said, I plan and invest for retirement as if I will receive nothing. I just feel safer depending on myself. Our government isn’t inspiring much confidence from me right now. If my optimism is proven incorrect, I hope my realism protects our future. That is why we are keeping my 401(k) open. We also have two fully funded Roth IRA’s and invest in individual stocks. It is also why my husband is working towards his pension in the school district. In short, we are planning to provide for ourselves but I do expect a little help some day. It would be a nice bonus.

If you are about to reach age 62, are you taking your benefits early or holding off?



Crystal Stemberger uses Budgeting in the Fun Stuff to write about finding the balance between paying your bills, saving for your future, and budgeting in the fun stuff along the way.