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Three reasons to delay retirement past 65

Less than half of U.S. adults expect to be financially prepared for retirement when the time comes, according to Northwestern Mutual's 2023 Planning & Progress Study. As Ambrecht points out, delaying retirement can help workers improve their financial forecast. Here's how.

1. Maximize your Social Security benefit

For each month you retire before reaching the full retirement age, your benefit will be reduced by a small amount: 5/9 of 1%, to be exact.

Yes, you can begin receiving Social Security as early as age 62, but if you were born in 1960 or later you don't reach full retirement age until 67. As Armbrecht explains, you can lose a significant amount by retiring just a few years early. Receiving Social Security at age 62 reduces your retirement benefit to 70% of the full amount; at age 65 it’s reduced to 86.7%.

2. Reduce deductions

Armbrecht says your income represents a key factor in dictating when you should retire. If your adjusted gross income before retiring is more than $19,560 a year, he says, you can face major penalties. Adjusted gross income is your gross income minus adjustments, which can include educator expenses, student loan interest, alimony payments or contributions to a retirement account.

This information was essentially correct when the video was posted in 2022; however, the income threshold has since increased to $21,240. If you retire before the full retirement age in 2023, the Social Security Administration will deduct $1 from your benefits for each $2 you earn above $21,240.

3. Reduce your tax bill

Taxes are another major consideration when deciding to retire, Armbrecht says.

He explains that you face a higher federal tax rate if you earn income while receiving Social Security. Indeed, the SSA notes that you can be taxed on as much as 50% to 85% of your benefit. The more income you earn, the more you're taxed on.

While it's true that you should figure for taxes — federal and state — when you make retirement calculations, Armbrecht's advice assumes viewers will continue to work even if they retire early.

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Who is Keith Armbrecht?

Armbrecht has been sharing tips for navigating Medicare on his Medicare on Video YouTube channel for at least eight years.

While Armbrecht seems to offer useful information, viewers should be cautious. He doesn’t appear to be a qualified financial or tax adviser, and he does not list any credentials. Before following his advice, visit the SSA website to learn more and find the most up-to-date information on Social Security benefits.

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The road to retirement may seem long, but with WiserAdvisor, you can find a trusted partner to guide you every step of the way

WiserAdvisor matches you with vetted financial advisors that offer personalized advice to help you to make the right choices, invest wisely, and secure the retirement you've always dreamed of. Start planning early, and get your retirement mapped out today.

About the Author

Sarah Brady

Sarah Brady

Freelance Contributor

Sarah Brady is a (self-)certified money nerd. She's a personal finance writer and speaker who's been helping individuals and entrepreneurs improve their financial wellness since 2013. Sarah has written for Forbes Advisor, USA Today's Blueprint, FORTUNE, Experian, Investopedia and more,

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