In the 21st Century, more and more people are choosing to retire early, figuring they have amassed enough resources to take them through old age. Still, there is a good percentage of older workers who prefer to continue working into their 70s. It is true that the life expectancy for both men and women is much higher today than it was in the 1930s. Naturally, more people will be driven to work more and retire later. But each of these decisions has an effect on one’s Social Security benefits. The average retirement age currently is 65, but this again differs on when you were born. Retire at this age, referred to as ‘full retirement age’ and you receive full benefits from Social Security.
Should you choose to retire early, it means you begin receiving your Social Security benefits earlier. Unfortunately for you, your benefits will be reduced. You will receive 0.5% less for every percentage of benefits you are entitled to each month. For instance, if you retire four years earlier than your full retirement age, benefits from Social Security reduce to about 75% of the total amount you could have received had you waited four years before starting to receive benefits. The higher the full retirement age is raised, the higher the percentage you lose in benefits.
Delaying your retirement on the hand has positive effects on the benefits you get from Social Security. If you continue working beyond your full retirement age, your benefits are increased by a given percentage each month, from the time you are due for retirement until the time you decide to stop working or attain the age of 70. The increase you get is based on your year of birth.