Retirement Age and How It Affects Retirement Income

Although the retirement age is generally a choice that every person makes for himself, most people will work until they reach the age that the Social Security Administration has set. For every person there will be a different situation where it concerns their finances, family obligations and available income when they reach retirement age and stop working.

Whether a person is qualified for retirement income from Social Security or not is based on accumulation of credits. Each person gets maximum 4 credits a year, 1 credit for every $1,000 he makes that year. Thus, you receive 3 credits for $3,000 and so on. If your age is close to retirement age, you should go check if you qualify for retirement income from Social Security.

For a person to receive benefits from Social Security, he must have worked at least 10 years and his retirement income will be calculated based on the average money produced while working and based on a formula the government has made. For those born after 1960, full retirement payment is available when they reach the retirement age of 67, while those born before 1960, full retirement payment is available when they reach the retirement age of 65.

Your Retirement Income Comes With Your Age

If you are considering retiring and receiving your money from Social Security before reaching full retirement payment age, it can be done, but by doing so you will lose a percentage of the total income. For instance, a person of 62, 4 years from the full retirement payment, will receive benefits reduced by 25% and a person of 63 will receive benefits reduced by 20%.

For people who cross the full retirement payment time and still are in active duty there are monthly percentages increases in income. Therefore, if a person that passed the age of 66, but continued working until age 70, finally considers retiring and checking his full retiring payment, he will receive an 8% growth as long as he didn’t withdraw any money in the last 4 years from his account.

If you are planning to retire, be sure to sign up for benefits three months before your retiring date. But if you’re planning to work past 65, be sure to sign up for Medicare three months before your birthday, as you will have to pay a higher insurance premium otherwise.