The Basics of Retirement Benefits Within Social Security
Retirement benefits are available to those who have paid enough Social Security taxes (through income withholding) to be fully insured for retirement benefits. If you have worked and paid taxes on your income for a good portion of your life, you will almost certainly qualify for retirement benefits.
You are eligible to receive full retirement benefits when you have reached full retirement age. The full retirement age used to be 65. However, the full retirement age is rising. Depending on when you were born, your full retirement age may be anywhere between 65 and 67.
You can opt to receive retirement benefits prior to reaching your full retirement age starting at age 62. However, you will receive a PERMANENT REDUCTION PENALTY in the amount of your monthly benefit for opting for early retirement. The earlier you retire, the greater the amount of the reduction.
Jim has worked his entire life in heating and cooling repair and decides it is time to call it quits when he turns 62 years old. He has always paid taxes into Social Security and decides he wants to go ahead and draw his retirement benefits. When he applies, the agent at the Social Security office doesn’t tell Jim that his benefits will be permanently reduced. He begins drawing a retirement check in the amount of $1280 per month. When Jim turns 65, his full retirement age, he finds out that his full retirement amount should be $1600. However, he is not eligible to receive this monthly rate now. His monthly check will be $1280 for the rest of his life. If he had waited to retire, he would be receiving $320 more per month.