- 1 Quarter Earnings = 1 Credit
- 1 Year Earnings = 4 Credits
- 10 Years Earnings = 40 Credits
- Age 62: eligible to draw a permanently reduced benefit.
- Full Retirement Age (FRA): the age you can draw your full, unreduced benefit.
- Age 70: the age in which you can draw the maximum, increased benefit.
- Emotional and,
Retirement Income TimelineOne of the most important concepts to understand in your retirement is your retirement income timeline. By definition, we mean exactly that: In your retirement, what fixed income will you be receiving from the age/year that you retire all of the way until your financial plan terminates (at death). Example: you retire as a FERS at age 57 when you have achieved your Minimum Retirement Age (MRA) and 20 years of Creditable Service. You were eligible at retirement for the FERS Supplement. When you retired, you received your FERS Pension as well as your FERS Supplement until age 62. For 5 years, you had two sources of fixed income: your FERS Pension and the Supplement. But once you turned age 62 and were eligible to draw on social security, your FERS Supplement ceased. Remember, the FERS Supplement was a bridge to help you in your retirement planning – it was not intended to be a permanent income source. Now you have three choices,
- Start Social Security at age 62 when your FERS Supplement stops. Doing so means accepting a permanently reduced social security benefit which is almost 6% a year for every year before your FRA you started social security.
- Wait until you reach your Full Retirement Age (FRA) and begin social security for an unreduced benefit.
- Wait until you reach age 70 to start social security benefits, allowing that monthly benefit to potentially increase by just under 8% a year.
To start social security early or, delay until age 70?When you start your social security benefits earlier than your FRA, you are choosing to do so at a permanently reduced rate. The reduction in your social security benefits is nearly 6% for every year you started social security before your FRA. If you delay your social security benefits beyond your FRA, you are choosing to receive a nearly 8% per year increased benefit for every year that you delay until you reach age 70. That is mathematically a substantial difference! How could an increase in your social security benefits by 32+% change your retirement lifestyle (example, FRA at 66 but delaying until age 70)?
How do you fill the gap when your FERS Supplement stops at age 62?If you elect to delay starting your social security benefits until you reach your FRA or later, how do you fill the cash flow gap in retirement when your FERS Supplement stops?
- Part-time employment or,
- Distributions from your retirement savings account(s).