When to Start Collecting Retirement Benefits

Are you deciding whether to start drawing your social security retirement benefits early at age 62? Many people are opting to start early but remember you are getting a reduction of approximately 30 percent less. If you can wait, do not collect until you are fully vested at your full retirement age. Furthermore if you wait until age 70 you will receive approximately 128% of your benefit. You can do your own calculations to find the percent increase you would receive.

Many people are opting to start their retirement at age 62. It is important then to budget what you have so your savings, investments and retirement benefit will provide for your essential needs.

Before making this important decision take a few points into consideration:

    • Retirees who are at least 65 years old qualify for Medicare while younger retirees will have to buy their own insurance on the private market. Private insurance is very high and can cost thousands of dollars extra a year.
    • Retirees under the age of 66 are often not eligible for the state and federal level retirement tax benefits.
    • If you are considering a move, research states that offer more for less. One thing to consider is moving to a state with no income tax. The seven that qualify are Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming.
    • Certain states offer exceptions from paying tax on 401k and IRA. For example, Kentucky excludes all pension, annuities, 401k and other deferred compensation plans up to a certain annual limit. 2015’s limit was 41,110. Kentucky also offers beautiful green landscapes with a very reasonable cost of living.
    • Research the cost of living for the state you are planning on retiring in.  If retirement income is limited, you  might want to consider  one of the lower cost of living states.
Highest cost of living according to CNBC include:
California, Vermont, New York, Hawaii, Rhode Island, Massachusetts, Oregon, New Jersey, Connecticut, Alaska
Lower cost of living states include:
Nebraska, Kentucky, Tennessee, Alabama, Michigan, Oklahoma, Indiana, Idaho, Mississippi
Most importantly, sit down with your financial advisor to discuss your retirement options to ensure you cover all aspects of your retirement needs.
Empyrion Wealth Management (“Empyrion”) is an investment advisor registered with the U.S. Securities and Exchange Commission under the Investment Advisers Act of 1940. Information pertaining to Empyrion’s advisory operations, services and fees is set forth in Empyrion’s current Form ADV Part 2A brochure, copies of which are available upon request at no cost or at www.adviserinfo.sec.gov. The views expressed by the author are the author’s alone and do not necessarily represent the views of Empyrion. The information contained in any third-party resource cited herein is not owned or controlled by Empyrion, and Empyrion does not guarantee the accuracy or reliability of any information that may be found in such resources. Links to any third-party resource are provided as a courtesy for reference only and are not intended to be, and do not act as, an endorsement by Empyrion of the third party or any of its content. The standard information provided in this blog is for general purposes only and should not be construed as, or used as a substitute for, financial, investment or other professional advice. If you have questions regarding your financial situation, you should consult your financial planner or investment advisor.