Sunday, August 14, 2022

Can I Retire At 55 And Collect Social Security

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What Is A Good Monthly Retirement Income

Can I Collect Social Security Retirement and Social Security Disability?

Median retirement income for seniors is around $24,000 however, average income can be much higher. On average, seniors earn between $2000 and $6000 per month. Older retirees tend to earn less than younger retirees. It’s recommended that you save enough to replace 70% of your pre-retirement monthly income.

Is An Annuity Right For Me

Annuities can provide guaranteed income for your life. And they offer security through a set monthly income which can increase annually if you are eligible for a Cost-of-Living Adjustment . However, flexibility is not a feature of annuities. Once you set it up, an annuity doesnt allow you to change the income amount. Once you begin receiving monthly payments, you cannot cancel the annuity.

With annuities, you take money out of market risk and use it to give yourself a monthly lifetime income. Annuities are the only investment withdrawal option that guarantee you will not outlive your account balance.

Early Benefits Can Still Pay Off

However, taking early benefits can still pay off despite the reduced monthly check. But youll want to be sure you budget for a reduced benefit.

No one can predict how long youll live, but if youre facing a potentially significant reduction in life expectancy and are short of income, taking Social Security early may be appropriate, Neiser says.

Married women are also good candidates for claiming early benefits because they are likely to outlive their husbands. Those widows then become eligible to receive the greater of either their benefit or their late husbands benefit.

However, this scenario works only if the husband does not claim his benefits early. By not claiming early benefits, the husband effectively increases the monthly benefit his wife eventually receives. So youll want to calculate how filing early will affect your spousal benefit here.

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Early Retirement And Social Security Payments

If youre wondering how much youll get from Social Security, you can check out our Social Security calculator. It estimates how much youll earn depending on your annual income, the year you were born and when you choose to start receiving benefits.

The calculations for Social Security benefits come from your highest 35 years of earnings. Thats how the Social Security Administration comes up with your average monthly indexed earnings . If you retire too early , youll receive less Social Security. Thats the downside to an early retirement.

The table below comes from the Social Security benefits retirement planner and calculates the monthly increase rate by birth year:

Delayed Retirement Increase
8%2/3 of 1%

This means that the maximum number of retirement months is 60 for those retiring at age 62 when the full retirement age is 67. So your benefits could be reduced by up to 30%. Social Security calculates this maximum by multiplying 36 months by 5/9 of 1% and then adds total of 24 months multiplied by 5/12 of 1%.

Change In How You Report Earnings

Can I Collect Both Social Security Retirement and Disability Benefits ...

The Social Security Administration bases its benefit calculations on earnings reported on W-2 forms and on self-employment tax payments. Most individuals are not required to send in an estimate of earnings.

However, the Social Security Administration does request earnings estimates from some recipients: those with substantial self-employment income or those whose reported earnings have varied widely from month to month, including people who work on commission. Toward the end of each year, Social Security sends those people a form asking for an earnings estimate for the following year. The agency uses the information to calculate benefits for the first months of the following year. It will then adjust the amounts, if necessary, after it receives actual W-2 or self-employment tax information in the current year.

Once a beneficiary reaches full retirement age, his or her income will no longer be checked. Because there is no Social Security limit on how much a person can earn after reaching full retirement age, there is nothing to report.

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May Not Be Too Early To Retire But It Is Too Soon For Social Security

As you work to navigate the income equation in hopes of retiring at 55, cross Social Security benefits off your list of potential income sources in the short-term. Eligibility for Social Security benefits starts at 62 for retirees. Also, you’ll want to weigh whether you should file for benefits as soon as possible or hold off for larger checks. This might mean taping retirement accounts to delay Social Security longer, at least after you turn 59 1/2.

Social Security benefits include 35 years of average earnings, so unless you started working at age 20, the Social Security Administration will use $0 salary for the last few years when calculating your benefits.

Is 55 Considered Senior Citizen

As I mentioned, 55 is the age at which you’re considered to be a senior citizen — at least in the eyes on many businesses offering discounts. Being labeled a senior citizen might make you feel old, but you should still take advantage of the perks. For example, you can now get discounts on: Restaurants.

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Please Answer A Few Questions To Help Us Determine Your Eligibility

Many people who retire early because of health problems in their 50s and early 60s may be eligible for the Social Security Disability Insurance program. It does not matter whether you already get a company retirement benefit, long-term disability payments, or worker’s compensation benefits. You have a reasonable chance of approval if your health problems contributed to your decision to retire early or even if your health problems started or worsened after retirement. The Social Security Administration will require that you:

  • are working at levels below the SGA level
  • have disabling health problems that have lasted or will last at least 12 months, and
  • are still insured for the SSDI disability program.

How Much Money Do I Need To Retire At 55

ð´Can I Apply For Social Security Retirement Benefits In Advance of Age 62

Planning to retire at 55 is different from planning to retire at 65 or older for one very important reason: Youll need more money to last you through your old age. If you were to retire at 65 and live to age 90, your money would need to last 25 years. But if youre retiring at age 55 instead, your savings now needs to be able to stretch for 35 years. And that assumes you stay healthy and dont require long-term care at some point, which could significantly drain your assets.

So how much money do you need to retire at 55? The short answer is that it depends on the type of lifestyle you want to have. If you plan to scale back and live a very minimalist lifestyle that allows you to keep expenses low then you may be fine with less money. On the other hand, you may need a larger nest egg if your early retirement plans include traveling, buying a home or starting a business.

When preparing a budget to retire at 55, consider:

  • Your current monthly expenses

  • What you estimate your expenses would be if you were to retire early

  • How long you expect to live in retirement

  • What your main income sources will be before youre eligible for Social Security benefits or to make penalty-free withdrawals from a 401 or IRA

  • How much you currently have saved outside of a 401 or IRA

  • How long you have to save and invest until age 55

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Retirement Rules: Why 65

Age 65 has long been considered a typical retirement age, in part because of rules around Social Security benefits. In 1940, when the Social Security program began, workers could receive unreduced retirement benefits beginning at age 65.

From 1983 to 2000, the rules changed to gradually increase the Social Security full retirement age to 67. Currently, the Social Security full retirement age is 66 for those born between 1943 and 1959, and 67 for anyone born 1960 or later.

And the Social Security age requirement is not the only thing that’s changed. In 1940, anyone retiring at age 65 would spend, on average, around a dozen years in retirement.

Today, because of improvements in health care, that number has increasedand will likely continue to increase. So it’s important to factor this trend into your retirement plans.

Tip: Looking for estimates? Start visualizing retirement with your own info by visiting our planning tools and calculators.

Watch: How one woman found a new normal after leaving her long-time job.

Your Spouse Must Agree To The Option You Pick

If you are married and choose a Survivor Option other than Option 3, the law requires that your spouse consent to your choice by cosigning your retirement application. If your spouses consent is not provided, an Option 3 benefit will be paid to you and your spouse will be designated to receive the survivor benefit.

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Normal Retirement: Ages 66 To 70

For many, the upper 60s is the golden mean of retirement timingyou’re old enough to have built up a nice financial reserve and young enough to enjoy your job-free years. The fact that you’ll get your full Social Security payment at age 66-67 can make a huge difference, especially if you’re relatively healthy and likely to have an average, or longer-than-average, retirement.

Waiting also gives you a few extra years to shore up your tax-advantaged investment accounts. Investors who are at least 50 years of age can make a catch-up contribution to their 401 or IRA. For 2021 and 2022, those 50 or older can contribute $7,000 to a traditional IRA or Roth IRA. If you use a 401 to save for retirement, you can defer up to $26,000 of your salary in 2021 once you reach the age of 50.

Also, waiting until you hit 65 means that you are eligible for Medicare, which is typically a fraction of the cost of individual insurance plans for older adults.

Normal retirement age, or the age at which you receive full Social Security benefits, gradually increases to 67 for anyone born in 1960 or after.

How Much Should I Save For My Pension

When Can I Collect My Full Social Security Retirement Benefit?

For those planning for retirement in an ideal world they should be saving as much as possible and therefore a better question to ask yourself is how much can I afford to put towards my pension fund each month?

Generally, by the time you reach retirement your mortgage will be paid and your children will have moved out of home. However, there are other expenses that will still have to be paid. If, for example, you haven’t bought your own home, then rent will still need to be paid. Any health insurance scheme you had through your employer will cease when you stop working. Equally, now that you have more time to do the things you like to do, you will need to have enough money to fund your lifestyle in retirement.

If relying on the State pension, a person must be 66 years of age in order to qualify**. Therefore, if you are planning on surviving on the State pension alone, early retirement is not an option. It is also important to note that the age of State retirement is set to increase over the next few decades. By 2021, the retirement age will be 67 and by 2028 it will be 68 years of age.

So if you are planning on retiring in your 50s or early 60s, you will need a substantial pension pot to sustain you over the next 20-30 years.

Planning for retirement is an important step to take, and it’s never too soon or too late to start planning your pension which will help you to have the lifestyle and financial stability you desire in your retirement.

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You Can Receive Benefits Before Your Full Retirement Age

You can start receiving your Social Security retirement benefits as early as age 62, but the benefit amount will be lower than your full retirement benefit amount.

If you start receiving your benefits before your full retirement age, we will reduce your benefits based on the number of months you receive benefits before you reach your full retirement age.

If you wait until age 70 to start your benefits, your benefit amount will be higher because you will receive delayed retirement credits for each month you delay filing for benefits. There is no additional benefit increase after you reach age 70, even if you continue to delay starting benefits.

Should I Retire Early Or Apply For Social Security Disability

If you are having health problems that have made working impossible and you are nearing the age of 62, you may think deciding to retire early may be the best option.

However, you need to look at the overall picture and determine whether early retirement or applying for Social Security disability would be the best option in your given situation. The Social Security Administration has very specific guideline regarding retirement benefits and disability benefits.

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How Does Early Retirement Affect Social Security

Many adults look forward to retirement. And some wouldnt mind leaving the workforce ahead of schedule. But few people think about the drawbacks of retiring early. Few realize that an early retirement might affect their long-term financial plan and their access to certain benefits. A financial advisor can help you figure out all of your retirement and social security issues.

Death Of A Retired Member

Retire at 55? What Happens To Your Social Security

Please contact DRS as soon as possible. If the retiree chose a survivor benefit, we must update the account for payments to continue. If the retiree did not select a survivor option, we need to stop monthly benefits to avoid an overpayment. When you contact us, please be ready to provide the deceased retirees full name, Social Security number and date of death.

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Figuring Out If 55 Is Too Early To Retire Requires Financial Planning

At any age, you’ll want to make sure you’ve fully thought through your retirement plan before retiring. Retiring early requires even more planning as the traditional sources of retirement income aren’t available and new challenges, like health insurance, arise. Here are some financial planning tips for executives looking to retire at 55.

Are Seniors Getting Extra Money In 2021

The Government of Canada issued a one-time payment of $500 to eligible Old Age Security recipients aged 75 and older in August 2021. This payment will not affect eligibility or benefit amounts for Alberta seniors financial assistance programs. For payment information, contact Service Canada at 1-800-277-9914.

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Can I Legally Retire At 55

Theres nothing in the retirement rulebook that says you cant retire at 55 years old. In fact, some members of the FIRE movement aim to retire as early as 40. So its perfectly legal to retire in your mid-50s if thats your goal.

But its important to keep in mind that retiring at 55 isnt the norm for most people. If youre going by the normal retirement age prescribed by Social Security, for example, that usually means waiting until youre 66 or 67. And some seniors may choose to delay retirement to their 70s or simply keep working indefinitely.

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Can I Retire At 55 And Withdraw Money From A 401k Or Ira

How Much Can I Earn at Full Retirement Age &  Still Receive Social ...

You can save money in a 401 or Individual Retirement Account to help you fund your early retirement goals. However, you might encounter a problem if you want to withdraw money from these accounts before the age of 59 1/2.

The Rule, age 55, is the first. This IRS rule states that if you are fired, laid off, or quit your job within the year you turn 55 you can withdraw money from either your current 401k or your 403(b without penalty.

You cant tap money from 401 plans that you have at your former employer without a penalty. This can be avoided by rolling your old 401k or 403b into your current one before retiring.

Unless you are eligible for some exceptions, you cant withdraw money from a traditional IRA before you turn 59 1/2. You can withdraw your original contributions tax-free and without penalty with a Roth IRA. To do this, your

Roth IRA account must be open for at least five consecutive years. If you are not eligible for an exception, you will need to wait until you turn 59 1/2 before you can withdraw your earnings.

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Special Power Of Attorney

Through the CalPERS Special Power of Attorney, you can appoint a representative to make retirement-related decisions on your behalf, should you become incapacitated. The CalPERS special power of attorney grants authority specifically for CalPERS retirement issues. For this reason, we recommend filing a Special Power of Attorney form , regardless of whether you already have a power of attorney set up through another resource.

Whats Your Social Security Break

If youre looking to maximize your total lifetime Social Security payout, youll want to conduct a break-even analysis to determine when you should start drawing your benefits.

Your break-even age occurs when the total value of higher benefits starts to exceed the total value of lower benefits .

For example, if you are eligible to collect a reduced $900 benefit at age 62 plus 1 month, and your benefit would increase to $1,251 at age 65 and 10 months, your estimated break-even age is 75 years and 5 months.

If you expect to live beyond that age, it could make financial sense to delay drawing benefits. The Social Security Administrations life expectancy calculator can help you decide.

When it comes to calculating a start date for Social Security benefits, however, theres not an age thats appropriate for everyone. Consider your own financial needs, health and other retirement plans before making the call. If you cant reasonably afford to live without taking benefits, it may make little sense to delay taking your benefit.

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