The Benefits of Waiting Until Your Full Retirement Age to Retire

Retiring can be a complicated process when it comes to making the most financially beneficial choices about the timing of your retirement. Retiring early is often forced upon the worker by his company’s plans for reorganization. When an employee is faced with the choice to retire now or later, he should do so after having examined the full financial impact of his decision. The most important factor is often the age at which you choose to retire. Full retirement age differs for different retirement vehicles.

Retirees can leave work and receive Social Security Benefits from the age of 62 to age 70. If you retire earlier, you will receive a smaller annual amount, but if you can wait until age 70, you will receive a 32% bonus for waiting. Of course the reason the government offers this bonus is the general fact that you will live fewer years after age 70, making their obligation to you last for fewer years.

Retirees who have built up a retirement package generally have to wait until age 59 1/2 to receive tax deferred benefits without penalty. Penalties are 10% of the distribution for each year prior to age 59 1/2. There are a few situations that can exclude you from those early withdrawal penalties such as having a hardship, a disability, having medical bills in excess of 7.5% of income and being unemployed at or after age 55.

If you make it to the full retirement age for Social Security or a pension or retirement plan, you will generally receive more money. This is because you have added more money and your money has had more time to grow. For most people, this is the most prudent course of action. Allowing your money to work for you as well as working for your money has been the best established way to insure there is enough money for you to have a comfortable retirement.

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