More than 1,000 older Americans shared with Business Insider their biggest regrets in life. These included not saving enough for retirement and taking Social Security benefits too early. In a 2020 survey, nearly half of Americans 60 and older said they couldn't afford their daily needs.
There are advantages and disadvantages to taking your benefit before your full retirement age. The advantage is that you collect benefits for a longer period of time. The disadvantage is your benefit will be reduced.
If you are due $1,000 a month at full retirement age, then your benefit by claiming at age 62 would be reduced by 30% to $700. In this scenario, waiting until age 65 to file for benefits means you would break even when you're a little over 77 1/2 years old.
More than two-thirds of retirees wish they would have saved more and on a consistent basis — and half wish they hadn't waited so long “to concern themselves with saving and investing for retirement,” according to the researchers.
While some research suggests that early retirement can indeed boost happiness levels, other studies have found that the timing of retirement may not be the sole determinant of an individual's overall satisfaction and contentment.
Key themes included lack of financial literacy and overspending. Many regretted not hiring a financial advisor or planning for unexpected challenges such as job loss or health issues. Others wished they had started saving earlier or been better prepared for Social Security cuts and rising medical costs.
If you haven't made plans to delay claiming your Social Security at that point, chances are you will just go ahead and start at 62. It takes planning to be able to delay starting to collect your benefit. Maybe working a bit longer, at least part-time.
In the case of early retirement, a benefit is reduced 5/9 of one percent for each month before normal retirement age, up to 36 months. If the number of months exceeds 36, then the benefit is further reduced 5/12 of one percent per month.
You can start your retirement benefit at any point from age 62 up until age 70. Your benefit will be higher the longer you delay your start date. This adjustment is usually permanent. It sets the base for the benefits you'll get for the rest of your life.
The $1,000 per month rule is designed to help you estimate the amount of savings required to generate a steady monthly income during retirement. According to this rule, for every $240,000 you save, you can withdraw $1,000 per month if you stick to a 5% annual withdrawal rate.
If your spouse dies, do you get both Social Security benefits? You cannot claim your deceased spouse's benefits in addition to your own retirement benefits. Social Security only will pay one—survivor or retirement. If you qualify for both survivor and retirement benefits, you will receive whichever amount is higher.
Over 1,700 older Americans and counting shared their financial and other regrets with BI. Many had regrets about retiring too early, taking Social Security prematurely, and draining savings. This is part of an ongoing series about boomer regrets.
You can travel more widely, or even consider taking a job overseas. You can take a lower-paying job without needing to pay or save for dependents. And you can manage your schedule based entirely on your own needs. Early retirement can let you take advantage of all of these newly expanded options.
1) Not Changing Lifestyle After Retirement
Among the biggest mistakes retirees make is not adjusting their expenses to their new budget in retirement.
If you choose to receive benefits before you reach full retirement age, your monthly benefits will be reduced. You can work and still get retirement and survivors benefits. If you're younger than your full retirement age, there are limits on how much you can earn without affecting your benefit amount.
Have you heard about the Social Security $16,728 yearly bonus? There's really no “bonus” that retirees can collect. The Social Security Administration (SSA) uses a specific formula based on your lifetime earnings to determine your benefit amount.
If you become disabled before your full retirement age, you might qualify for Social Security disability benefits. You must have worked and paid Social Security taxes in five of the last 10 years.
Those facing financial emergencies, such as a layoff or debt, may benefit from accessing Social Security early. If you retire early and need extra income, Social Security benefits can provide supplemental funds to support your new lifestyle, hobbies or retirement activities.
The earliest you can start taking Social Security retirement benefits is 62. However, the Social Security Administration reduces benefits by 30% for people who retire at 62, meaning they receive just 70% of their full retirement benefit each month for life. SSA.gov.
How much does the average 62-year-old get from Social Security? The average Social Security benefit overall was $1,905.31 per month in 2023. But it's larger today thanks to cost-of-living adjustments (COLAs). Benefits increased 3.2% in 2024, which would raise the average benefit to $1,966.28.
Millennials are twice as likely as any other age band to cite childcare as a reason for not saving for retirement. The life events millennials face can have a huge disruption on their ability to save. These include parental leave, childcare commitments, becoming a homeowner and career change or break.
Leaving the workforce too soon was the No. 1 financial regret uncovered by researchers who compiled data for the National Bureau of Economic Research working paper. Of those surveyed, 34% wished they had worked longer, while only 6% said they regretted working too long.