Your retirement age determines when and how you can access your retirement money. Retirement age rules vary from plan to plan and from country to country.
Your 401(k) plan, for example, may define retirement age differently than your pension plan or Social Security. Here are the things you need to know before you choose your retirement age.
Retirement Age for Social Security
The earliest age you can collect your Social Security retirement benefits is age 62 – but just because you can collect at this age doesn’t mean you should. You’ll get a larger monthly amount by claiming at a later age. In addition, if you take Social Security at 62, or any time before full retirement age (which varies by your date of birth), and you continue to work and earn an amount in excess of the earnings limit, your Social Security benefits will be reduced. Don’t start collecting your Social Security benefits until you understand how your start age affects your benefits. Married couples in particular need to do careful planning as they can often get an increased survivor benefit when they coordinate when and how they each begin their benefits.
Age You Can Begin Withdrawals From a 401(k) Plan
You may be eligible to withdraw money from your 401(k) plan as early as age 55. Different rules apply to distributions you take at different ages. Key 401(k) retirement ages to be aware of are 55, 59 1/2, and age 70 1/2. If you are not yet age 55 and you need to access your 401(k) money, you might be able to use a 401(k) loan, or take a hardship withdrawal, however, be cautious of early withdrawals. There is creditor protection provided to money in a 401(k) plan, so you need to think twice before you cash out of your plan.