2 Big Factors in Determining Your Best Retirement Age

What is the best age to retire? Will it be 65 when you first qualify for Medicare? How about when your Social Security benefit is at most 70? Or it could be 59 1/2 – the age you can tap Pension savings Without paying the fine?

Half of the retirees said they did not budget much for this

When retiring, one size-fits-all answers are not. You need to fully assess your circumstances. There are two main financial factors to consider: how much you will get from Social Security and how much is in your nest egg.

What will be your Social Security benefit?

Social security It is an important component of most retirees’ incomes. The plan is designed to shift about 40% of the average person’s pre-retirement income, but this can vary considerably depending on a number of factors, including the age at which you decide to claim benefits.

If you have not yet done so, sign in to your Social Security account Expect how much you will get in your full retirement age.

This lesser known pension savings tool is loaded with tax benefits

You can choose to apply for Social Security anywhere between the ages of 62 or in your late 70s. But if you claim at any age other than your full retirement age (66 to 67, depending on your year of birth), your benefits will be more or less the same. In particular:

  • If you claim 36 months before reaching full retirement age, your benefits will be reduced by 0.56% at the beginning of each month (6.67% per year).
  • If you claim for more than 36 months, your benefits will be reduced by 20% and 5% less per year than this window.
  • If you start your benefits after reaching full retirement age, your benefits will permanently increase by 8% each year you choose to wait.

This means here. You can say you were born in 1960 or later, which means your full Social Security retirement age is 67. That is, if your benefit at full retirement age is 8,800 per month, your actual benefit could be 2 1,260 if you claim 62, or 23,232 if you wait until you are 70 years old. This is a huge limitation, so Social Security time should be a factor when determining your ideal retirement age.

Do you have enough savings?

It does not matter how much money you have in the bank, but how much income you get after retirement is important.

Retirement income usually comes from one of two sources, assuming you do not plan to work part-time. The first is standard resources such as social security and any pensions you have. You have savings, which should meet your remaining needs.

Most pension planners agree that you will need 80% of your pre-retirement income to maintain the same pension plan. So, if you and your spouse earn $ 100,000, you will need about $ 80,000 in annual income after you retire. If you receive $ 30,000 from Social Security, it saves $ 50,000.

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Using Acceptable Incomplete “4% Rule” Pension (which can be used to multiply your income requirement by 25), which means you will need 25 1.25 million of the total pension savings, which means you don’t have to worry about running out of cash and running out of money.

Keep in mind that if you retire early, you will not be able to access all of your pension savings. With one 401 (g), You can access your money without penalty after the age of 55 if you leave your job, and with other pension accounts, the standard penalty-free withdrawal age is 59 1/2.

Every situation is different

As a final thought, remember that every situation is different. These are not the only two factors you should use to determine your ideal retirement age. For example, if you retire before 65, you need to figure out where your health is going to come from. If you plan to pay off your mortgage and car before you retire, you can get less than 80% of your pre-retirement income. Thoroughly evaluate all factors before deciding.

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