5 Factors for Deciding Whether to Take Retirement Benefits Early 

2 comments Posted on July 2, 2014

Dear Deborah,

I am 61 and I’d like to retire and begin taking Social Security benefits next year. But I’m not sure if I should take early retirement benefits or wait until full retirement age.  I want to consider the aspects of taking benefits now versus waiting. What should I be aware of that will help me decide? – Jim

There are several factors to take into consideration before making this important decision. This is a personal decision; what’s right for one person may not be right for another.  It’s good to settle on a decision that’s best for you.

Let’s look at some factors as you consider which option to take.

DearDeborah-Book11)    Your health and family history
Do you have excellent health and expect to continue with relatively good health? Or do you feel as though your poor health is getting in the way of optimal work performance?

Do you have considerable stress in your job? Stress-induced health problems can affect one’s decision to stop working and have a more leisure pace.

Working too many years in an overly stressful job can limit your life span. (Source: actuarial study of “Longevity vs. Retirement Age” by Dr. Ephrem Cheng). If you are feeling the consequences of stress-related work, you might consider opting for early benefits.

Consider your family history and life expectancy. Did your parents and grandparents live into their 80s and 90s? Were they productive citizens with few health concerns during those years? If you also expect to live longer than average, you may want to delay retirement.

2)    Your work plans
If you’re considering taking early benefits, do you intend to continue working? This would be a mistake, according to Pennsylvania Institute of Certified Public Accountants (PICPA).  Why? There is an “earnings cap” penalty when Social Security payments are made before one’s full retirement age. When you collect benefits early, between age 62 and your full retirement age, and your job brings in more than the cap, you’d lose $1 in benefits for every $2 earned over the annual limit.

Beginning with the month of your full retirement, you’re eligible to get your benefits without a limit on your earnings, according to The Wall Street Journal.  But also be aware that this is in reference to penalties tied to earnings.  “Any work you do is also subject to income tax, and could cause your Social Security benefits to be subject to tax, as well” WSJ.

In retirement, tax rates can vary.  However, retirees that have money in tax-free Roth accounts, tax-deferred 401(k) and IRAs can plan for the optimal time to withdraw their funds.

3)    Your surviving spouse benefits
Many couples don’t realize their decision of when to claim Social Security benefits can possibly affect their spouse’s benefit.

A surviving spouse is qualified to 100% of the benefits of the primary wage earner. For the surviving spouse to receive the most income, delay retirement until full retirement age to begin receiving benefits.

DearDeborah-Book24)    Your retirement savings and standard of living
Are you satisfied with the amount of retirement savings you have set aside?  Do you have a 401(k) or similar plan with savings? Are you, or will you be drawing a pension?

Have you thought about what kind of standard of living you’d like to have in your retirement years? Have you planned carefully so you are financially prepared to have the affordable lifestyle you would like?

Financial advisors are finding that many Boomers underestimate their debt. They are carrying debt into retirement with mortgages, car loans, college loans, and credit card debt.

How much of one’s income will Social Security benefits provide? It “provides 50% of the income for more than half of married retired couples and about 20% for high earners,” according to Money magazine.

In general, Social Security benefits will not be adequate to cover one’s living expenses during retirement.  For individuals who receive Social Security retirement benefits, the average monthly benefit is $1,131. When thinking about retirement, it’s important to focus on how you will supplement your benefits. Employer-sponsored programs and individual investments and savings fill in the gap.

More families are realizing they need to work longer to set aside more funds for their retirement years. For many of them, their retirement savings is not yet at a level with which they are comfortable.

To have a comfortable retirement, financial analysts advise to save early and often. Save as much as you can while working. Work as long as you are able. Plan ahead so you can draw from several income sources.

5)    Reduction in benefits for early retirees
Retirees who start to collect Social Security benefits early at age 62 usually receive 25% less in benefits than if they had delayed to claim benefits until their full retirement age. To maximize your benefits for the longer term, it’s beneficial to wait.

Payout example: Early retirement age (62): Receive $900 per month

Full retirement age   (66): Receive $1,200 per month

There is considerable monetary advantage for delaying your benefits.

In conclusion, it is ideal when people, having weighed the factors, are able to choose the most convenient time to take their retirement benefits.

Copyright 2014. All rights reserved. Permission to reprint required.

Deborah Nayrocker writes on personal money management topics, showing others how to take control of their financial future. Her book, Living a Balanced Financial Life, blends important biblical principles on money with contemporary issues.  It is in the Bible study series Following God, Christian Living, by AMG Publishers. The 8.5×11 paperback is ideal for group or individual study and it is available at your local bookstore. Nayrocker is also the award-winning author of The Art of Debt-Free Living – Living Large on Less Than You Earn.

We’d like to hear from you. If you have a financially-related question that you would like to ask Deborah, please share your question and/or comment below. Be sure to check back each month for more articles and products available at your local Christian bookstore.


  • 07/24/2014
    Maya said:

    1)Do you think you’ll have enough money for a cromoftable retirement?Does not apply. I love my career as an artist and hope to die with the tools of the trade in my hands.2) Do you plan on receiving the social security benefits that have been promised to you?Sure, I’m a boomer. I plan to tap in at 62. But my intent is to pass it along every month to someone in one of the following generations. There’s some delicious irony there.3) What % of your income do you save today for retirement?When I work my savings rate is usually around 40-50%. But let me say that life so far has been like a long summer vacation. I have taken as much as a year to enjoy myself and recharge my batteries several times in my adult life. I rarely reject an offer to go river rafting or fishing (which are very low cost and high enjoyment activities). On the financial side, I sold my suburban home four years ago and rent a small farm now. The cash is well invested (I hope) since it has more than doubled in that time. To buy in my locale would cost me at least triple what I now pay in rent. 4) Where would you like to retire?I’m an avid, no, really I’m a compulsive food gardener and tree grower. Soil, water, four real seasons and open spaces blow my skirt up. I’ll stay in the USA and take my chances with the coming times since my tribe is here. 5) How old are you, and what age do you plan on retiring?The answer to part one is that I’m just about to turn 61. For part B see the above.A little rambling: The real goal is to have a good life. Keep it simple and full of heart. Be joyful doing vigorous work. Eat healthy food not poisonous crap. My key to having enough money has been to tighten down the outflow spigot rather than exert myself in the mind numbing quest for big bucks. Oh yeah, exchange goods and services with others because the return is much greater (though a bit difficult to quantify). You have all seen pictures of some ancient and very wrinkled peasant in bib overalls holding a bunch of grapes with a twinkle in his eye and a wise smile on his face. This is not a bad goal. Finally, it is better to die deservedly well loved than rich.

  • 07/25/2014
    Allen said:

    I will comment on this beacuse I AM retired already – it wasn’t rocket science. . .I am now 57 and retired at 55 – I started putting 10% into my 403 (the public version of 401) in 1983 when it was offered at University of California. I also have a decent pension system with healthcare from UC. I am coordinated with Social Security, and will likely take it at 62 if it is still offered. . .if not, I can live without it. My advice to people in their 20’s and 30’s is to live below your means, save 10%(I put my money in an equity fund from 1983 to 1998 – when I switched to a bond fund) and buy real estate, ONLY if rent to own ratio comes back into line.I bought my condo in 1987, and in 1992, my neighbor wanted out of his place, and sold it below market value to me, during the last housing crash in California. I rented it out for positive cash flow, and sold it in 2004 for tripple the money.Timing is everything – I think there will be a lot of opportunities for investment in foreclosed properties in the next 2 years. . .also some nice blue chips can be picked up at low costs. . .I got Chevron back this week at 78 with a 3% dividend.Living of course in San Diego – good downtown airport, nice weather, and at least enought culture to keep me happy – hey it isn’t NYC or SF, but ok.Another advice – don’t build your life around doom and gloom – things looked pretty bad in 1981, and again in 1992. . .the economy usually muddles through, and those who invest at low prices are rewarded.


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