One thing to know about Social Security is that the benefits of retirement depend on the age at which you retire. When (and in what order with your spouse, if you are married) you start taking Social Security benefits can have an incredible impact on your lifetime income.
The longer you put it off, up to 70 years, the more revenue you will get. Depending on your age, you can get credit for any year that delays exceed a full retirement year.
These loans are known as deferred retirement loans and vary between 3% and 8% depending on when you were born.
How Retirement Loans Work
Those who retire early receive a reduced amount. The amount decreased exactly 5/9 from one percent for each month (up to 36 months) before full retirement, and 5/12 from one percent for an additional 24 months thereafter. If you grab your Social Security as soon as possible at age 62 (and most of us), the benefits could be reduced by as much as 30%.
Deferred retirement loans
|year of birth||Credit per year|
|1943 and later||8 percent|
What a difference the years make
Year Born rate of increase Monthly rate of increase1933-19345,5 percent11 / 24 of 1 percent1935-19366 percent1 / 2 of 1 percent1937-19386.5 percent13 / 24 of 1 percent1939-19407 percent7 / 12 of 1 percent1941-19427.5 percent5 / 8 of 1 percent in 1943 or after 8 percent of 2/3 of 1 percent
Your choice to delay retirement may also affect the amount of benefits your remaining spouse receives. If you start receiving benefits after the full retirement age, your spouse should receive full benefits plus deferred pensions.
Those who qualify for a divorce or a widower’s spouse can also defer their benefits, but in the meantime apply for a marital benefit.
If you are still married and want to postpone your retirement, full retirement benefits may be waived. That way your spouse can start collecting while you wait and collect more retirement delays. How and when each person collects Social Security should be carefully considered to maximize benefits. There are also some calculators to help.
Do not delay Health Insurance
If you postpone retirement until age 70, keep in mind that the same thing is not allowed with Health Insurance. Even those individuals who continue to work must apply for Health Insurance when they become eligible at age 65.
In fact, you can start as early as three months before your 65th birthday, which is a good idea because it makes your Health Insurance effective during the month when you turn 65. Otherwise, you have up to three months after your 65th year to sign up and should be effective. July 1, the year you enroll.
Those who fail to apply on time will end up paying higher premiums. For each year you are eligible and do not apply for Health Insurance B, your monthly premium increases by 10%.
Whether you postpone your retirement depends on your own circumstances. But understanding the consequences of such a move can help you make an informed decision.