SOCIAL SECURITY: WHICH IS MUCH BETTER EARLY OR LATE RETIREMENT?

by Jinky C. Mesias

The social security retirement benefit is given during the normal retirement age of a qualified member. The normal retirement age is the age at which the retirement benefits equal the amount of the primary insurance. However, the normal retirement age of members varies by year of birth. Any retirement before the normal retirement age may reduce the retirement benefits to be received by members however the opposite applies if ever members choose to retire after the normal retirement age. The amount of retirement after the normal retirement age is also much higher.

The social security follows a table of benefits in order to determine the amount of retirement benefits to be given. Likewise, the retirement benefits may be higher or lower than the amount of the primary insurance of the retiring members. The difference is brought about by the age of the member on the time he or she wants to retire. To maximize the amount of retirement benefits, members may delay their retirement up to the age of 70. However, any member is not hindered from retiring as early as the age of 62. The disadvantage of early retirement is the reduction in the amount of retirement benefits that members will receive.

The reduction in the benefit for early retirement is about 5/9 of one percent for every month before the normal retirement age up to 36 months or 3 years. But if the difference between the normal retirement age and the applied retirement age of the member exceeds 36 months or 3 years an additional deduction of 5/12 of 1% per month is employed.

In the case of retiring members whose normal retirement age of 66 but chooses to retire at the age of 62 then a total of forty-eight months is going to be deducted. The reduction of 48 months is split in the following manner: the first 36 months is 5/9 of 36% or 20% while the remaining 12 months is computed as 5/12 of 12% or 5% which sums it up to a total reduction of 25% in the retirement benefit.

In addition to the increase in the retirement benefit for delayed retirees there is also the so-called delayed retirement credit which is given for those members that would retire after the normal retirement age. However, in order for members to avail of such benefit it is important that they must be insured at the time they reach the normal retirement age or else no credit will given to them even after they reach the age of 69.

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Jinky C. Mesias is a graduate of Bachelor of Science in Business Administration Major in Business Management. She is at present an Associate Manager of a Life Insurance Corporation and a freelance writer.

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