Bauerle Financial: Early Retirement vs Delayed Retirement
Retirement is a tough pill to swallow for some folks. Some are ecstatic and ready to depart from the workforce, and others feel like if they stop working they will drop dead. Are you having trouble trying to decide which type of retirement strategy you want to implement? Maybe this explanation of early retirement vs. delayed retirement will help.
People who are planning for retirement need to be aware that retirement benefits are dependent on your age at retirement. If you choose to retire before normal or full retirement age, you will receive reduced retirement benefits. A person is allowed to choose to retire at the age of 62, but doing so may result in a large reduction in retirement sometimes up to 30% of your total retirement.
In the case of early retirement, the fiscal benefits one receives is reduced to 5/9 of one percent for each month before the normal retirement age up to 36 months. If that timeline of early retirement months exceeds 36 months, then the 5/9 reduction is pushed to a greater reduction of 5/12 of one percent per month.
In the case of delayed retirement, your retirement benefits increase considerably, due to the delayed retirement credit. The delayed retirement credit is only issued for retirement after the normal age. To receive this credit you also must be insured. Also, no credit is added past the age of 69, so keep that in mind. Keep in mind that if you retire before the age of 70 some of your benefits will not become applied until the following year after you start your retirement benefits.
Below is a chart of the percentage of retirement credit based on your birth year.
Hopefully, this has been informative and helpful to you in your planning for retirement. Retirement can be a lot to plan for, Bauerle Financial can help you set up a plan to make the most of your retirement.
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