Social Security is Changing. Here's What You Should Know.
The Social Security Administration has changed the formulas for benefit payouts. If you are sixty years of age or more you are in the forefront of a big change in social security. The full retirement age (FRA), when you can collect your entire earned benefit, has been changed from 66 to 67. The implementation of this change will occur in two-month increments over the next six years.
You can still begin receiving social security benefit payments at 62. However, delaying it until later years, up until the age of 70, will ensure you receive a larger check for each month you opt to postpone payouts.
The key question is: should you work longer in your current career or should you change trajectories and work full or part-time in a new industry? The answer depends on how long you have been employed and how much you earned during the previous years of your work life. Normally, seniors who have experienced full employment during their working lives receive relatively modest benefits by postponing retirement, but if you've been out of the workforce, it may help a lot to keep working.
For example, if you are approaching retirement after a full career you must weigh the pros and cons of retiring at 70 versus 62 years of age which, according to the social security calculator, boosts your benefit a modest 6.7%. To some retirees that percentage increase may be important when factoring in COLA (cost-of-living adjustment) and inflationary tendencies. To others, the workload of retirement at 70 might not outweigh the enjoyment of increased leisure time made available to themselves in their earlier retirement years. They may also have a significant amount of funds in a 401(k) or annuity to offset the modest social security increase. By contrast, workers who have been in and out of the workforce can increase their benefit as high as 18.4% by working full time until age 70 which in turn positively impacts their retirement benefit.
Being proactive about responding to the new full retirement age for social security benefits is crucial to positioning your financial plans and goals to accomplish such a transition. One certainty is that every senior has a different situation based not only on their age but, on their work and financial history.