United States Social Security (SSA) has issued a clear message that few saw coming. Reconsidering the retirement age can radically transform the income you'll receive when you retire. Although retiring early may seem attractive, the figures behind the new official statement invite deep reflection.
For years, many Americans have chosen to start collecting Social Security benefits as soon as it's legally possible. That is, at age 62. However, what SSA now wants the population to understand is that waiting can mean a significant financial difference for the retirement stage.
Ssa guarantees much more money
According to data from Social Security in the US, a person who decides to delay retirement until age 70 could receive approximately $2,188 per month. That's a lot compared to the $1,377 they'd get if they retire at 62. This monthly difference of more than $800 equals an annual increase of nearly $10,000.
In other words, waiting can mean a pension that's 59% higher. This is something that shouldn't be overlooked when making such a crucial decision as when to stop working.
Additionally, retiring at full age, which for many people born in 1960 or later is at age 67, also has its reward. In that case, the average monthly benefit stands at $1,809. This is a middle ground that notably improves the early pension, although it's still less than for those who wait until 70.
The most relevant aspect of this SSA announcement is that it's not just advice, but a strategy backed by calculations. The US Social Security system determines payments based on the worker's 35 highest-earning years, adjusted for inflation. From there, the Primary Insurance Amount (PIA) is calculated, which sets the base for the benefit to be received.
For example, someone who retires at age 62 only receives 70% of their PIA. Meanwhile, if they decide to wait until 70, they can get up to 124% of the original benefit. This difference translates into a better quality of life in retirement and greater long-term financial security.
A change for the better
This change in focus at SSA aims to encourage better financial planning among future retirees. While not everyone can afford to work beyond 62 or even 67, those who can have a clear opportunity ahead. It's about receiving a higher and more stable pension.
The recent announcement from US Social Security isn't just a recommendation, but a wake-up call. Think carefully before setting your retirement date.