This video discusses Social Security payment issues you need to think about if you retire early.
Social Security is one of the most important “safety nets” that modern society has created. Part forced savings, part employer matching, part government responsibility, this benefit has successfully served hundred of millions over time.
But what happens to the Social Security payment when the “rules” are changed and someone doesn’t work until retirement age? You’ll find out when you watch this video!
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Disclaimer: this video is for educational and entertainment purposes only and is not meant to be a substitute for legal, accounting, tax, or professional advice. If you have any specific questions about any legal, accounting, tax or other professional service matter you should consult the appropriate professional services provider….(read more)
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The REAL Impact of Early Retirement on Social Security
Early retirement may seem like a tempting option for those who want to enjoy their golden years without the burdens of a 9-5 job. However, it’s important to consider the impact of early retirement on Social Security benefits. While retiring early may provide short-term benefits, it can result in a reduced income in the long run.
The age at which you start receiving Social Security benefits has a significant impact on the amount you will receive each month. The full retirement age (FRA) for most people is 66 or 67, depending on the year of birth. If you start claiming benefits before your FRA, your monthly benefit will be reduced. For example, if you start claiming benefits at age 62, the earliest age you can do so, your monthly benefit will be reduced by up to 30% compared to what you would receive at your FRA.
This reduction in benefits can have a substantial impact on your overall income during retirement. For individuals who retire early and rely solely on Social Security to support themselves, this reduction could mean a significant decrease in their standard of living.
Furthermore, early retirement can affect other aspects of Social Security, such as spousal and survivor benefits. If you choose to retire early, your spouse’s or survivor benefit may be reduced as well. This means that not only your own benefits are affected, but those of your spouse or surviving spouse as well.
It’s also worth noting that once you start claiming Social Security benefits, your ability to earn income may be limited. If you decide to return to work after claiming benefits, there is an earnings limit that may result in a reduction of your benefits if exceeded.
In light of these considerations, it’s important to carefully weigh the pros and cons of early retirement. While the idea of early retirement may be appealing, it’s crucial to consider the long-term impact on your financial well-being. Many retirees find that it’s more financially feasible to continue working until their FRA or even later, in order to maximize their Social Security benefits.
For those who are considering early retirement, it’s important to explore alternative sources of income and savings to supplement their Social Security benefits. This may include personal savings, investments, and part-time work. Additionally, seeking the advice of a financial planner or retirement expert can help individuals make informed decisions about their retirement options.
In conclusion, the impact of early retirement on Social Security benefits is substantial and should be carefully considered. Retiring early may provide immediate relief from the daily grind of work, but it can also result in reduced income and financial strain in the long run. It’s important for individuals to carefully weigh their options and explore alternative sources of income in order to make the best decision for their financial future.
Good video but I think you missed one important point…the longer you wait, the more impact future COLA adjustments will have on your monthly SSA check for the remainder of your life.
I retired on SSDI comfortably at 38 i wish you would talk about Social Security disability not just SSI
A 65yr old coworker friend retired when I was 24yrs old working at Boeing. Called him 3 months later and his Widow answered. So I quit and became a builder living well below my means and "retired" at 40. Not rich at 60 but I'll be fine and I added 20+ yrs of no alarm clocks. social InSecurity is twice the poor investment/tax when self employed and I'll be getting back dollars worth 40%of contributions paid in. That's if the exponentiating Nat Debt doesn't implode the dollar's value, but I never expected to pay for much w SS paybacks anyway.
Wife waited until 69 1/2 years old to start her SS which was the same age she retired from an easy job she enjoyed until the last couple of months when things started to change for the worse, so she got out. I've been retired for 3 years and waiting until I turn 70 in a few months to start collecting SS. We're both in good health. Wife gets a small pension, enough to pay for both our Medicare, Drug plan and Supplement plan. That coupled with our increased SS since we waited, we can live very comfortably without touching any of our retirement accounts. Wife's family lifespan history is past mid 90's of age. I figure I could last mid to late 80's. We did the math, considered everything including survivors benefits and decided it was in our best financial interest to wait to collect SS. Works for us.
3:25 bend points
I retired 22 years ago at 45 without a pile of money. I have earned money to fund my retirement, so what defines "retired"? I worked as a software engineer for 19 years, most maxed out SS payments. Earlier I served in the Army, construction, student so lower income. I assumed I'd get almost no SS. I got estimates from SS which I assumed were computed thinking I'd be returning to work. But the estimates have not been reduced and I'm 67 now and past FRA. Current estimate is $3081/mo but I don't plan to take SS until age 70. Not going to be happy if when I collect the reality is much less than the estimate. But I'd be OK.
I'm not sure what the definition of FIRE is but I'd say anyone who retires before 59.5 is basically retiring early. I'm 44 and hoping to retire around 53-55. That feels quite early iyam.
Not working 35 years isn't a huge deal. Not if you earned good money in a chunk of those years. I have several years of wages starting at age 13 through college that were quite low. So those years aren't doing much for me anyway. And the bend points screw you once your earnings get high enough. So again, having say 35 years of strong wages isn't going to help as much as you think.
If those who collect at 62 out of fear of immanent death are so sure that those who wait to 70 are going to expire at age 70 1/2 and miss out of all kinds of adventure they (the 62ers) should doing the Irish Jig and thanking those waiting because while waiting they are still contributing to SS money that is being sent out to recipients and thus funding the early retirees extended cruses and weeklong trips to Paris.
Glad i waited until 65 1/2 for social security as it increaed the montly check by $800 . . . if i live another 13 years. Death remains the wildcard in all calculations!
Postponing for highest SS pmt. 100 weeks till I’m 70 & start my permanent vacation. Hubby retired due 2 health. My job is flexible & good & remote 4 of 5 days. Long life in my family & excllnt health. We decided to finish house projects now while I’m still earning. Completed new roof, kitchen redo , & 1 more to go. Hopefully will put a big dent in mortgage.