Quick quiz: When do you officially become "old"? The average Baby Boomer defines "old age" as 72, according to a 2009 Pew Research study, and feels nine years younger than his or her chronological age. But even if you think they're just numbers, the government considers 62, 65, 66 and 70 to be the major milestones of aging -- and agree or not, you can't afford to ignore them.
"Some decisions are irreversible and could result in reduced benefits later or increased taxes," said Scott Simpson, CFP, a financial planner for Focus Financial in Minneapolis. No matter when you plan to stop working, a visit to the Social Security office, as well as a financial planner and/or accountant, is a good idea, Simpson said. "It's best to get help and do your research up front."
Here are the government's milestones, and what they mean for your financial future.
Age 62: Social Security Eligibility
You can begin to draw Social Security benefits at age 62, but be aware:
• According to the Social Security website ssa.gov, the benefit at age 62 is "about 25 percent lower than what it would be if you waited until you reach full retirement age."
• If you are still earning, you may have your benefits reduced for every dollar you earn over the annual maximum, which is $14,640 in 2012.
• Claiming early retirement can also reduce the amount a surviving spouse may receive. On the other hand, according to the Social Security website, "If you qualify for benefits as a widow, widower or surviving divorced spouse on another record, you may choose to apply for survivor's benefits now and delay your retirement benefit until later."
Age 65: Medicare Eligibility
Decisions about which, if any, parts of the coverage to take at age 65 may involve your employer as well as your financial planner and insurance agent. See "Applying for Medicare Only": ssa.gov/retire2/justmedicare.htm