Calculating Retirement benefits

Choosing when to retire is one of the most important decisions you will make in your lifetime. If you choose to retire when you reach full retirement age, you will receive your full retirement benefits. But if you retire before reaching full retirement age, you will receive reduced benefits for the rest of your life.

If you work past your full retirement age, you will get full retirement benefits no matter how much you earn. If you continue working and decide not to collect your retirement benefits until you reach age 70, you will get higher benefits when you retire. If you choose not to collect retirement benefits before you reach full retirement age, you should be sure to file for Medicare when you reach age 65. If you do not, you may have to pay a higher premium when you file later.

Full retirement age

For many people, determining the amount they can reasonably expect to receive from Social Security is an important first step in estimating retirement income.  However, as you probably know, there is currently a debate as to whether Social Security will remain solvent in the years ahead, and more importantly, what effect this will have on future retirees.What we do know is that the normal retirement age at which full benefits are payable is age 65 today, but will gradually rise to 67 or 68 in the next 20 years (see chart).

Furthermore, there are other factors which need to be included when you consider Social Security:

• Early retirement results in a permanent reduction in the Social Security retirement benefit.
  
• According to the Social Security Administration the average monthly Social Security benefit for all retired workers was 2005 is $955.