Social Security and Medicare: The best age to start retirement

There are many factors that average American workers weigh when making significant decisions about retirement.

One of the first things people seek information about as they approach the possible end of their careers involves figuring out what age is best for them to take the bold step. 

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Naturally, the question of whether or not they are financially ready to retire is also at the top of their minds. People look closely at their expected Social Security income, possible Medicare costs, 401(k)s, other investments, debts, and savings — then balance those against the lifestyle they want to be able to afford after their working years.

That lifestyle consideration generally involves calculating how much they want to travel, the relative expense of the hobbies they wish to participate in, where they hope to live, and how much time they want to spend with family and friends.

Another important factor is an individual’s health and physical ability to participate in these desired activities. This also involves the cost of health care, including Medicare coverage and other potential expenses.

Many workers approaching their retirement years also worry about their emotional well-being. For a significant number of them, career status and the nature of their jobs provides a social network, a feeling of belonging and a sense of purpose. The transition to a less busy lifestyle can be a daunting prospect.

The question of when to retire differs among individuals. Some basics to learn about involve how age plays a factor in Social Security benefits and Medicare enrollment.

How retirement age affects Social Security payments

The Social Security Administration (SSA) explains that it bases a retiree’s benefit payment on the amount of money they earned during their working career. Higher career earnings lead to higher benefits.

The age at which one retires also affects the amount of their Social Security payments. The earliest possible Social Security retirement age is 62. If you retire at 62, your benefit will be lower than if you wait until your full retirement age. 

If you retire at your full retirement age, you will receive your full Social Security benefits. For people born between 1943 and 1959, the full retirement age is 66 (or some point between their 66th birthday and the time they turn 67). For those born in 1960 and later, the full retirement age is 67.

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Some people decide to stop working before age 62. But if they
do, the years with no earnings will most likely mean lower
Social Security payments when they decide to claim them.

Alternatively, some people choose to delay their retirement beyond their full retirement age. Each extra year they work adds another year of earnings to their Social Security records — and higher lifetime earnings can mean higher benefits when they retire.

In some circumstances, health problems force people to retire early. Applying for Social Security disability benefits is an option in these unfortunate situations.

Related: Dave Ramsey bluntly speaks on Social Security and Medicare

When retirees can enroll in Medicare

The age at which people can enroll in Medicare is far less complicated. The initial enrollment period is a 7-month window that begins three months before one’s 65th birthday.

The SSA recommends that people should sign up for Medicare as soon as they are eligible, even if they have not started receiving
retirement benefits yet. That is because, in some circumstances, medical
insurance will cost more if one delays applying for it.

The exception is that people under 65 with certain disabilities may also qualify for Medicare.

So, it’s accurate to say that the best age to retire depends on one’s individual financial circumstances, health and personal desires. 

Knowing some basic facts about age requirements can help people who are preparing for retirement begin to make some informed initial decisions.

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