When you retire can be just as important as how much you save for retirement. Choosing when to stop working and when to claim Social Security can affect your income, taxes, and financial security for years to come.
The truth is, there is no single best retirement age. The right timing for retirement depends on your Social Security benefits, other income sources, health and longevity, and personal goals.
Prosperity Group helps you weigh these factors through a comprehensive retirement and income strategy focused on creating pension-like income, protecting assets, reducing risk, and developing tax-conscious strategies. And remember: your retirement date and Social Security claiming date do not have to be the same.
What Is the Best Age to Retire?
When you retire can matter just as much as how much you save. However, your retirement date and your Social Security claiming date do not have to be the same. You can stop working at 62 but delay filing, or claim at 62 while transitioning to flexible part-time work.
A key starting point for Social Security planning is your Full Retirement Age (FRA). For people born in 1960 or later, the FRA for retirement benefits is 67. For earlier birth years, FRA ranges from 66 to 66 years and 10 months. When you claim relative to your FRA determines your lifelong monthly payout.
A strong retirement plan looks beyond whether you have enough to retire today. It considers how your assets and income can support you throughout retirement.
When to Retire: How Social Security Timing Affects Income
You can generally claim Social Security as early as age 62. However, claiming at the earliest eligibility results in a permanent benefit reduction, which varies by birth year. For those born in 1960 or later, this can reduce your benefit by up to 30% compared to your FRA payout.
If you wait until your Full Retirement Age, you receive 100% of your Primary Insurance Amount. For people born in 1960 or later, delaying benefits beyond an FRA of 67 earns delayed retirement credits of 8% per year, up to age 70. For this group, claiming at 70 results in 124% of the benefit available at full retirement age.
In plain language, claiming early provides income sooner but typically means a lower monthly payment, while waiting can provide a larger payment later.
Consider how long your income needs to last
Longevity and inflation are two of the biggest factors in financial planning. Your money needs to sustain your lifestyle for decades while maintaining its purchasing power as costs rise.
Should you delay Social Security until 70?
Delaying Social Security can increase your monthly benefit, making it an important strategy to consider when planning for retirement income. However, there is no universal break-even age or claiming strategy that is best for everyone. Your health and longevity, cash-flow needs, taxes, other income sources, and overall financial strategy should all factor into the decision. If you expect a longer retirement, a larger monthly benefit may provide greater value over time.
Build a Retirement Income Strategy Beyond Social Security
Evaluate Social Security alongside your investment accounts, savings, taxes, inflation, and risk tolerance. Your provisional income, which generally includes one-half of your Social Security benefits plus your other income, including tax-exempt interest, can affect how much of your benefits is subject to federal income tax. Depending on your income and filing status, up to 85% of your Social Security benefits may be taxable.
Find the Right Retirement Timing for Your Goals
The best time to retire depends on more than your age. A confident retirement strategy considers your income needs, taxes, longevity, risk, and available resources to help you make informed decisions about your future. The retirement and income specialists at Prosperity Group can help you build a personalized strategy focused on safe money, security, and solutions.
We provide comprehensive retirement and wealth planning services to help you thrive. Our strategies focus on tax-free income, 401(k) and IRA growth, risk reduction, and asset protection. By using our Prosperity Plan ABCs and safe money strategy, you can secure an inflation-friendly, growing income customized to your timeline.
Join us in keeping your money safe and creating a retirement income strategy built around your goals. Schedule a visit today to start building your comprehensive financial roadmap.
Photographer: Harbucks / Shutterstock