Early retirement at the age of 62 is what millions of Americans dream of. Social Security has set that as the earliest age to file for retirement. Of course, you may receive Social Security Disability Insurance much earlier, but it is because you have a condition and you cannot work.
The first thing you need to keep in mind is if you can afford to retire. Your retirement benefits may be enough now, but as you lose buying power with inflation, your check may not be enough in 20 years’ time.
Apart from that, other people like to think about the fact that they may not have such a lively social life. Others love their job and they would miss it too much, so they’d rather continue working instead of getting Social Security.
Check your Social Security statement
It is more than likely that you get less money from Social Security than from your current job. Therefore, it is of vital importance to make use of the tools available.
By doing so, you can see the future possible retirement benefits amounts. First, get your annual statement. There is plenty of useful information there for you and your family.
Then, make use of the benefits calculator SSA has and see your future payments with inflated dollars as well. Therefore, make sure that if your income is reduced, you can make up for this loss with savings and investments.
Secondly, early retirement reduces your check by 30%. Seniors who opt for late retirement at 70 can collect much larger checks. Social Security will give them a reward of about 24% extra per month.
Social Security at 62 and combined income
Bear in mind that if you decide to work and get Social Security at the same time, you may have to pay taxes. Then, you will get a reduction in your Social Security benefits.
Remember that the Administration could tax either up to 50% or even 85% of your benefits. These thresholds are 25,000 dollars or 34,000 dollars for individuals.
The retirement earnings test exempt amounts are $21,240 under full retirement age in 2023. That is about $1,770 per month. Do not exceed those caps or you will get a 1 dollar reduction for every two you go over the limit.
What is more early retirement can reduce survivor benefits amount if you pass away. That could leave your spouse with a much smaller payment every month. The sooner you retire, the earlier you may need your savings and money from investments too.
Waiting until you can withdraw money without paying taxes is key. Even if you do not file for Social Security retirement benefits, you will benefit from the new COLA, so be wise and delay it as much as you can.