There are many factors that average American workers consider when making important retirement decisions.
One of the first things people look for information about as they approach the possible end of their careers involves finding out what age is best to take the bold step.
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Naturally, they also have in mind the question of whether they are financially prepared to retire. People take a hard look at their expected income from Social Security, potential Medicare costs, 401(k) plans, other investments, debt, and savings, then compare them to the lifestyle they want to be able to afford after their working years. .
That lifestyle consideration typically involves calculating how much they want to travel, the relative expense of hobbies they want to engage in, where they hope to live, and how much time they want to spend with family and friends.
Another important factor is an individual's health and physical ability to participate in these desired activities. This also involves the cost of healthcare, including Medicare coverage and other potential expenses.
Many workers approaching their retirement years also worry about their emotional well-being. For a significant number of them, their professional status and the nature of their jobs provide a social network, a sense of belonging and a sense of purpose. Transitioning to a less hectic lifestyle can be a daunting prospect.
The question of when to retire differs between people. Some basics you should know have to do with how age influences Social Security benefits and Medicare enrollment.
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How retirement age affects Social Security payments
The Social Security Administration (SSA) explains which bases a retiree's benefit payment on the amount of money he or she earned during his or her working career. Higher professional income leads to higher profits.
The age at which you retire also affects the amount of your Social Security payments. The earliest possible Social Security retirement age is 62. If you retire at age 62, your benefit will be less than if you wait until your full retirement age.
If you retire at your full retirement age, you will receive all of your Social Security benefits. For people born between 1943 and 1959, the full retirement age is 66 (or sometime between their 66th birthday and the time they turn 67). For those born in 1960 and after, the full retirement age is 67 years.
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- How Average Americans Can Better Plan Their 401(k) Retirement Income
Some people decide to stop working before age 62. But if they do, the years without income will likely mean lower Social Security payments when they decide to claim them.
Alternatively, some people choose to delay their retirement beyond their full retirement age. Each additional year they work adds another year of earnings to their Social Security records, and higher earnings over their lifetime can mean higher benefits when they retire.
In some circumstances, health problems force people to retire early. Applying for Social Security disability benefits is an option in these unfortunate situations.
Related: Dave Ramsey speaks bluntly about Social Security and Medicare
When can retirees enroll in Medicare
The age at which people can enroll in Medicare is much less complicated. The initial enrollment period is a 7-month period that begins three months before your 65th birthday.
The SSA recommends that people enroll in Medicare as soon as they are eligible, even if they have not yet started receiving retirement benefits. This is because, in some circumstances, health insurance will cost more if you delay applying for it.
The exception is that people under age 65 with certain disabilities may also qualify for Medicare.
Therefore, it is accurate to say that the best age to retire depends on one's financial circumstances, health, and personal wishes.
Knowing some basic facts about age requirements can help people preparing for retirement start making some informed initial decisions.
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