When will you retire? If you’re like some of us, you might ask, “Is my next birthday too soon?” If you’re looking at this from a social security and pension plan perspective, your next birthday may or may not work out for you.

There’s an American cultural answer to when you’ll retire…it’s 65. That’s when you get the gold watch, and your co-workers throw you a party in the conference room with black balloons and cake and lots of over-the-hill jokes. (Remember when that was still true?)

Today, retirement age is defined a little differently and there is now something called your “full retirement age.” Full retirement age, as defined by Social Security as the age when you’re eligible to receive full benefits is different depending on when you were born.

Back in when Social Security was first established, 65 was Retirement Age, and that was that. When you turned 65, you started collecting Social Security and spent the rest of your life puttering in the garden and playing with the grandkids. For many retirees in those days, Social Security provided a good portion of your total retirement income. Those days are gone.

As the ratio of people paying into Social Security to those drawing upon the system has dwindled over the years, the government knew it had to make a change; otherwise, the well of government retirement benefits was going to dry up.

In 1983, President Reagan amended the Social Security Act to stagger the Full Retirement Age across a span of birth years. Remember, this is for purposes of receiving Social Security only, it has no impact on your personal investments, IRAs or employer-sponsored retirement plans.

Social Security’s Full Retirement Age Spread

Not at all. You always have the option of taking “early retirement” and begin collecting Social Security at age 62, no matter what year you were born. However, you will take a “hit” in your monthly benefit amount because it’s assumed you’ll be collecting over a longer period of time, based on your projected life expectancy. If you were born on January 1st, your full retirement age is based on the previous year.

If you’re looking to retire on your personal investments, IRAs or employer sponsored retirement plans, you can choose any retirement age, however, the amount you receive will vary depending on the amount in your various retirement accounts.

Some types of pension plans won’t begin paying you until you reach a certain age, such as 65, no matter when you chose to quit; and if you take any money from a qualified plan such as an IRA or certain personal accounts, such as annuities before 59 ½, you may be subject to tax penalties if you don’t structure your retirement income properly.

Now, just when you say, “None of this applies to me, I’ll never quit.” You still may be stuck…a little.

Even if you never want to retire…there are some types of plans, including traditional IRAs, that will make you begin taking income payments when you reach 70 ½, even if you’re still happily working away.