Determining the right retirement age can be complex, involving various factors beyond age, such as income and expenses. To plan and set goals easily, individuals can look for retirement age calculators. Alternatively, people who are nearing the Social Security retirement age should start looking at the retirement age chart based on their birth year. The chart can help them determine their full retirement age and the corresponding retirement benefits they are entitled to.
How to calculate retirement age?
Planning for retirement income requires careful consideration and various calculations. Multiple online tools can help calculate retirement age. To determine an estimated amount, a person’s current savings and age are also considered. The savings, monthly incomes, and retirement calculations are all put together to determine an average number. Online retirement calculators make it easy by taking into account rates of return, average salary increments, and compound interests to arrive at a number. Some people might be able to save more or less of the predicted amount based on the location in which they reside.
The Social Security Association also has an online retirement age calculator that helps individuals plan their retirement. Moreover, the interactive tool helps individuals plan a holistic and wholesome retirement. The tool also compares different retirement scenarios and helps one learn about the most beneficial options.
What is the full retirement age?
Full Retirement Age (FRA) or normal retirement age is the age at which an individual is eligible to receive the complete benefit from Social Security. While working, an individual’s social security receives a specific monthly amount that is saved towards their retirement; this amount is later received as a retirement benefit. The age to receive this benefit can be 66 or 67 years for some people. The Social Security Association determines the full retirement age of an individual based on their birth year. A major benefit of waiting to achieve FRA is that the individual can claim the complete benefit. If individuals start with benefit encashment earlier, the SSA can permanently lower their monthly benefits.
How to find the retirement age?
The full retirement age for people born in 1960 or after is 67 years. On the other hand, for seniors born in or before 1960, the retirement age is lower than the former group. To understand this better, the Social Security Association (SSA) has provided a detailed list of FRA for individuals based on the year they are born. This retirement age chart by birth also has details about the amount of social security retirement benefit payment an individual is eligible to receive if they start claims early. Over the years, the SSA has steadily increased the FRA for individuals to account for the increased age expectancy.
Relevance of retirement age
Irrespective of when one was born, the retirement benefits claim cannot be dispersed before one has reached 62 years of age. However, people who start receiving benefits at 62 also have to deal with a 25% decrease in their benefits. As implied earlier, this decrease is permanent for people who decide to claim benefits early. Choosing an earlier age can end up costing one as much as a 30% decrease in their benefits. On the other hand, individuals who wait till the age of 64 will only see a permanent decrease of 20% instead of 25-30% in their payments.
Advantages of claiming benefits at FRA
Individuals who choose to delay their retirement benefits payment beyond FRA are eligible to receive a higher benefit. The increase in retirement benefits payment is 8% of the pay every additional year one waits to claim benefits. If someone claims benefits at age 70, they receive 124% benefit, and individuals who start at age 73 may end up receiving 148% payment. Seniors who are not in any hurry to claim SSA retirement benefits should consider holding out on the claim process.
How are retirement benefits calculated?
Retirement benefits are based on a handful of factors. Planning retirement means calculating the individual’s retirement age and the amount they would need at that age. The savings options for individuals include social security, investment accounts and savings, and employer-offered savings programs like the 401(k).
Retirement age calculators can base the numbers on the person’s income. In this case, most experts advise individuals to spend their retirement on 70 to 80% of their monthly income. For example, if an individual makes $10,000 now, they are recommended that their spending does not extend beyond $7,500 or $8,000 a month. Another method people can adopt to calculate their retirement savings is according to their spending. This calculation works best for people who are spenders or savers by nature. That said, it is important to remember that the amount one spends will also differ based on their zip code. This can also affect their retirement calculations or spending if the individual plans on retiring to a different zip code.
How to start saving for retirement?
Once an individual has successfully calculated their retirement age and goal, they should focus their efforts on saving for retirement. As each year passes, it becomes important to ramp up savings. This can be facilitated by annual appraisals or earning higher incomes later in one’s career. Alternatively, individuals can focus on reducing expenses to plan and secure a comfortable retirement. This may involve cutting down unnecessary and impulsive expenses for many individuals.
