By Ash Toumayants
Have you recently turned 62 and now you aren’t sure what financial steps to take? As you know, most people are eligible for Social Security at this age and begin debating about taking this benefit. However, there are many factors to consider prior to taking Social Security, such as life expectancy, retirement date, and outside account balances. Social Security timing is a very important financial planning topic that shouldn’t be taken lightly. For instance, waiting longer to take this government program can increase your monthly benefit by 30%. Besides this, you should consider other important financial decisions like choosing a retirement date along with keeping your current industry knowledge updated.
Consider Taking Social Security Benefits
Social Security is an important government program that gives you a guaranteed source of income in retirement. 62 is the first age most people can claim Social Security, however, it’s wise to consider delaying Social Security to at least your full retirement age, or FRA. This age can vary based on the date of birth, but it’s 67 for those born after 1960. If you decide to delay benefits until age 70, your benefits could increase by 8% each year after your FRA.
Besides a higher monthly payment, you’d receive a higher cost of living adjustment (or COLA) if you delay your retirement benefits. Yet, if you have limited retirement funds or a family history of early death, it could be prudent to take Social Security early. These are the two main circumstances that might justify taking early SS benefits. Prior to doing this, be sure to consider all the factors and consult a competent and ethical financial professional.
Consider A Specific Retirement Date
You might consider retiring around age 62 as the median retirement age is 61. This could be a good time to retire based on your needs. For example, factors like debt, life expectancy, family history, and retirement account balances influence your retirement. If you have minimal debt, healthy retirement balances, and want to retire early, it might make sense to retire around age 62.
Another action item to take is running retirement projections or consulting a financial advisor to do this for you. One popular retirement modeling technique to use is called Monte Carlo analysis, which runs thousands of random statistical trials. These trials determine the probability your nest egg will run out based on annual distribution rate, rate of return, account balances, and other assumptions. You can use this calculator to obtain a high-level view of whether or not your funds will last through retirement.
Keep Your Knowledge Fresh
You might be at the end of your career, but you should keep your industry knowledge updated. For example, if you don’t want to work full time nor retire, consider taking on part-time consulting work. This way, you’ll be able to earn money, keep your skills updated, and contribute to your retirement accounts. Since more Americans are retiring after age 70, updating your skills can make you more competitive as an employee, business owner, or contractor.
In addition, because many retirees feel depressed and without a purpose after retiring, stimulating your brain will make you happier and ward off depression symptoms. If you update your industry knowledge, this will help you both financially and mentally.
The Bottom Line
62 is an important age for most Americans as it marks the time when most of us can claim Social Security. Before you make this important decision, you should consider your health, retirement lifestyle, and retirement account balances. In addition to making Social Security decisions, it’s also prudent to consider retirement dates and keep your industry knowledge updated.
We’re Here To Help
You don’t need to make this decision alone. If you’re not sure what to do when you turn 62, contact us at Strong Tower Associates to book a free, no-pressure consultation. Get in touch by calling 814-325-9806 or emailing [email protected], or, if you prefer, you can quickly and easily click here to request a meeting using our online system!
Ash Toumayants is a financial advisor and the founder of Strong Tower Associates. For over a decade, he has helped hardworking people across Central Pennsylvania prepare for retirement. Fueled by a passion for helping people see through the veil of confusion that shrouds the financial world, his goal is to educate his clients so they can make more sound choices regarding their financial future. A Penn State graduate, he currently lives in State College with his lovely wife, Noelle, and their four adorable children. Learn more by connecting with Ash on LinkedIn or emailing [email protected].
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