Retirement – How Do I Save For Retirement?
Retirement has become a word that we use to describe our desire for freedom from work. It’s a word that is used in many different ways, but what does it really mean?
We all have an idea of what retirement means, and it generally involves the idea of having more free time, spending more time with family and friends, and perhaps doing some traveling. But how do you go about planning for your retirement?
First, you need to make sure that you have enough money saved up to last through retirement. The reason retire early for this is simple. If you don’t have enough money saved, then you won’t be able to retire. You might have enough saved up now, but if you lose your job, or if you get sick, you could find yourself in a situation where you’re not able to retire.
If you’re worried about this, there are several things you can do to help you save for retirement. One of the best ways to save is to invest in stocks and bonds. You’ll have to do a lot of research before you can start investing, but once you know what you’re doing, you’ll find that investing is easy.
You’ll also want to make sure that you’re saving for retirement by contributing to a 401k plan. This is a great way to save for retirement because the company will match any amount that you put into the plan, and they’ll often pay you a bonus when you retire.
The Financial Impact of Rising Social Security Full Retirement Age
There are other ways to save for retirement as well. retire early You might want to consider starting a business, or even buying a home. There are many ways to save for retirement, but you have to make sure that you’re doing everything you can to ensure that you have enough money saved so that you can retire.
If you’re a U.S. worker and Social Security beneficiary, it’s important for you to know that the maximum potential retirement benefit from Social Security Administration (SSA) have changed over the years. The retirement age chart at www.ssa.gov/planners/retire/retirechart.html is an important retirement planning tool for future retirees.
Over time, the retirement benefit age (called full retirement age, or FRA by Social Security) has changed. Original Social Security Administration rules allowed workers to receive full retirement benefits at age 65. If the worker delayed retirement to age 70, he or she received a slight increase in the monthly Social Security retirement benefit. Later on, Social Security law changed to allow beneficiaries to claim retirement earlier at age 62. In other words, the eligible beneficiary could claim retirement as early as age 62 and as late as age 70. Determine your SSA full retirement age at www.ssa.gov/planners/retire/retirechart.html.
Retirement Benefit Adjustments
The decision to claim early retirement or to delay retirement past full retirement age is a personal one. However, it’s important for the beneficiary to realize that claiming early retirement means a permanent downward adjustment of his or her actual monthly payment from SSA.
The financial difference between claiming early retirement at age 62 and waiting until full retirement age is substantial for most. For instance, FRA for a beneficiary born in 1954 is age 66. If the beneficiary claims early retirement age 62, he or she agrees to lock in a monthly check that’s about 25 percent less than the check he or she might have received at FRA. Learn more about the impact of claiming early retirement at https://www.ssa.gov/planners/retire/agereduction.html.
FRA and Birth Year
Over the past decade, future retirees had the option to claim early retirement at age 62 and reached FRA at age 66. Starting in 2017, the beneficiary celebrating his or her 62nd birthday isn’t eligible for the full retirement benefit at age 66. Instead, he or she must wait until reaching the age of 66 years and two months to claim the retirement benefit. To determine FRA by birth year, visit www.ssa.gov/planners/retire/retirechart.html.
Simply stated, beneficiaries born in 1960 or thereafter reach Social Security Administration FRA at age 67. Younger workers must work longer to receive his or her maximum full retirement benefit from Social Security. The decision to claim retirement before reaching FRA will reduce the beneficiary’s maximum benefit at retirement.
SSA.gov’s age reduction chart at www.ssa.gov/planners/retire/agereduction.html demonstrates the positive or negative results of claiming retirement before reaching Social Security Administration full retirement age. Retirement – How Do I Save For Retirement? Spankerton
Benefits Reduction and Early Retirement
Gradual increases in FRA over time also magnify the negative impact of claiming early retirement. Similarly, the financial impact of waiting to claim retirement up to age 70 is reduced. Compare the botton line impact of claiming or delaying Social Security Administration retirement at www.ssa.gov/planners/retire/agereduction.html.
For instance, it’s important to realize that claiming benefits at age 66 in 2017 may actually be considered an early retirement benefit election if the beneficiary hasn’t reached his or her higher FRA:
- The difference between waiting to reach FRA at age 66 years and two months results in a permanently reduced 1.1 percent payment reduction.
- Claiming early benefits creates a greater reduction this year. For example, if the beneficiary claims early retirement and FRA age is 66 years and two months, his or her decision occurs at four years and two months before FRA—not four years.
- The decision to claim early retirement is more costly than ever before: a reduction of 25.83 percent (not 25 percent) in the monthly benefit results.
Delaying the decision to claim retirement up to age 70 is less valuable to beneficiaries than in earlier years. Instead of earning four full years of Delayed Retirement Credits, he or she now earns just three years plus 10 months of credits, or a total 30.67 percent increase above the previous 32 percent maximum.
The net result is that the retirement benefit at any age are slightly reduced because SSA’s retirement benefits chart has shifted to later FRAs. Start your personal analysis at www.ssa.gov/planners/retire/agereduction.html.
When to Claim SSA Retirement-How Do I Save For Retirement? Spankerton
The decision about when to claim SSA retirement is often based on health and/or economic necessity. It’s important to avoid inadvertently claiming early retirement by knowing your FRA: visit www.ssa.gov/planners/retire/retirechart.html.
The decision to delay claiming SSA retirement can have a positive financial impact. To compare how much more you can earn by waiting to claim retirement, use the information at www.ssa.gov/planners/retire/agereduction.html.