Planning Your Golden Years: Essential Insights on Full Retirement Age

Leaving the workforce can be challenging, and you may struggle to decide the best time to retire. Typically, individuals will aim for full retirement age to maximize their benefits.



However, when doing so, it’s important to understand full retirement and consider additional factors such as your health and changing standards. This article explains the ins and outs of full retirement age so that you can confidently take the necessary steps to retire.

Overview of Full Retirement

Full retirement age or “normal retirement age” refers to the age at which you become eligible to receive the total amount of Social Security benefits without reductions. This age varies according to the year you were born, but the general rule of thumb is that it falls between 66 and 67.

Those born before 1954 are eligible at age 66. Due to amendments, those born in the transitionary period between 1955 and 1960 have different standards. During this period, the full retirement age increased by two months per year, until reaching a new standard. Currently, anyone born after 1960 must be 67 to access their Social Security benefits.

These changes are to preserve the health of the social security system in the face of longer life expectancies. The goal is for future retirees to receive the same benefits as those before them.

Retiring Outside of Full Retirement Age

You can retire as early as 62. However, deductions to your monthly Social Security payout can make this a less desirable option. The exception to this rule is when you file for Social Security disability. In this case, you might be eligible for the full payout even though you didn’t reach full retirement age.

Alternatively, working beyond your full retirement age can yield you extra benefits. Any earnings beyond your full retirement age contribute to your lifetime earnings. This can produce a higher payout when you retire. By delaying your retirement, you receive an extra 8% on your benefits for each year you work beyond retirement age until you turn 70.

Understanding your Social Security Benefits

Social Security awards benefits based on lifetime earnings, the number of years worked, and when you choose to retire. Making informed decisions about when to retire requires careful consideration. It may benefit you to contact a financial advisor or social security representative to clarify your situation.

When retiring at full retirement age (FRA), you will receive a monthly payout equal to a percentage of your pre-retirement earnings. Those who earned lower wages can expect a higher percentage. Medium or high earners receive a lower percentage, but likely a higher amount.

Keep in mind that retiring before your FRA will likely yield a lower payout. For example, retiring at 62 will cause you to lose roughly 25% to 30% of your monthly income, depending on your full retirement age. If you retire at 65, you will still face deductions, but by a lower percentage than if you retire at 62.

Most financial advisers suggest that individuals need about 80% of their monthly earnings to retire comfortably. This amount includes not only your social security benefits but also personal investments.

Health Insurance Benefits for Retirees

As you age, it’s more likely that you will need more frequent care and, subsequently, more comprehensive health insurance. When retiring, it’s not only the monthly payout you can expect; you also have access to Medicare as a benefit.

Medicare is the most common form of federally regulated healthcare available to individuals over 65. This means you can apply for Medicare before you retire. Part A of Medicare covers hospital visits and is often free to those who have contributed to it during their working years. You can determine what medicare benefits you are eligible for by contacting a medicare health insurance broker in your state.

If you are not eligible for Medicare or want individual health insurance instead, there are plenty of options for those of retirement age. Navigating different regulations and finding a premium that is affordable on retirement income can be difficult, so it’s best to work with an insurance service to find what is best for you.

Navigating Important Retirement Decisions

Deciding when to leave the workforce can be challenging, especially when making decisions about your financial and physical well-being. Understanding the benefits you can receive and assessing your options is crucial to retiring comfortably.

Even if you’re still unclear, the good news is that you don’t have to go it alone. California residents can contact Sackett and Associates for more information. They can offer guidance regarding Medicare and post-retirement individual health insurance.