Reasons to Wait to Retire Past Age 65

The single best reason to wait to retire until past over age 65 is money.  The second best reason is opportunity.  While many people in the United States think the retirement age is 65, it isn’t the case anymore. That changed when the Reagan Administration reworked the Social Security system in order to keep it from collapsing. While it may be in danger again, for now the full retirement age is 66 and above, depending on the year of birth.

Those changes made it so anyone born before January 1, 1943 has a full retirement age of 65 and that means they have already reached their full retirement age. For those born January 2, 1943 through January 1, 1955, the full retirement age is 66 and some of those have reached their full retirement age while others are closing in on it. For those born after January 1, 1955 and before January 1, 1960, the full retirement age is somewhere above 66 but below 67. Finally, for those born after January 1, 1960, their full retirement age is 67.

So how does the money change by waiting until after age 65?  Retiring before full retirement age means a reduction in social security benefits. Anyone born before 1954, retiring at age 62 means a 25 percent reduction in social security benefits and that reduction increases until those born after 1960 who will have a 30 percent reduction in benefits. Therefore, retiring at age 65 means a 5-6 percent reduction based on the year of birth according to the Security Administration. To determine an individual’s social security benefits at any age from 62 on up, it is best to check the calculator provided by the Social Security Administration and by using selected ages above 66 and up to 71, it is easy to see the benefits of working past full retirement age.

Another benefit of retiring after age 65 is that if the decision is made to do some part-time work is that the Security Administration will withhold $1 for every $3 earned above $38,880 for those who reach their full retirement age in the same year they begin taking benefits. For those who will be under full retirement age for the entire year, the Social Security Administration withholds $1 for every $2 earned above $14,640. But for those who have reached their full retirement age, there is no cap on earnings and a retiree can earn as much as they want and still get their full retirement benefits.

By retiring past the age of 65 and closer to full retirement age a retiree will maximize their benefits, and can also work as much as they want if they want extra money. With good health and proper retirement planning the retirement years can also be the golden years.