Key Takeaways
- If you retire early, you could be missing out on thousands of dollars in Social Security benefits, so be sure you understand how it works.
- Social Security benefits are calculated based on your highest 35 years of work history, indexed for inflation.
- You can always retire early and still wait to begin your Social Security benefits.
Will my early retirement hurt my Social Security benefits?
It's possible that your early retirement may not affect your Social Security benefits at all if you already have 35 years of work experience under your belt and you already know when you want to start benefits and approximately how much you'll get. But if you haven't given these things any thought, now's the time to do so.
How will working After retirement affect my social security?
- Your Social Security benefits could be reduced—temporarily. Your age matters here, as we’ll see below, but any reductions that do occur are temporary. ...
- Make sure you enroll on time, and be careful with your HSA. Both Medicare and Medigap have specific enrollment periods. ...
- The bottom line. ...
Does early retirement reduce social security benefit payouts?
If you plan on working part-time during early retirement, you may find your Social Security benefits reduced. The reduction is based on something called the "Social Security earnings limit," and it only applies if you have not yet reached full retirement age. If your income is higher than the earnings limit, your benefits will be reduced.
Does working past age 70 affect your Social Security benefits?
While working past age 70 could mean higher Social Security benefits, it could also mean higher taxes and more.
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Can I retire at 55 and collect Social Security?
Can you retire at 55 to receive Social Security? Unfortunately, the answer is no. The earliest age you can begin receiving Social Security retirement benefits is 62.
Can I retire at 62 but delay Social Security?
The short answer is yes. Retirees who begin collecting Social Security at 62 instead of at the full retirement age (67 for those born in 1960 or later) can expect their monthly benefits to be 30% lower. So, delaying claiming until 67 will result in a larger monthly check.
How much Social Security will I lose if I retire at 62?
If you file early, Social Security reduces the monthly payment by 5/9 of 1 percent for each month before full retirement age, up to 36 months, and 5/12 of 1 percent for each additional month. Suppose you will turn 62, the earliest age to claim retirement benefits, in 2022.
Why retiring at 62 is a good idea?
Probably the biggest indicator that it's really ok to retire early is that your debts are paid off, or they're very close to it. Debt-free living, financial freedom, or whichever way you choose to refer it, means you've fulfilled all or most of your obligations, and you'll be under much less strain in the years ahead.
Is early retirement a good idea?
Pros of retiring early include health benefits, opportunities to travel, or starting a new career or business venture. Cons of retiring early include the strain on savings, due to increased expenses and smaller Social Security benefits, and a depressing effect on mental health.
How much are my Social Security benefits reduced if I retire early?
In the case of early retirement, a benefit is reduced 5/9 of one percent for each month before normal retirement age, up to 36 months. If the number of months exceeds 36, then the benefit is further reduced 5/12 of one percent per month.
Is it better to take SS at 62 or 66?
You Have a Shorter Life Expectancy For example, if you start collecting benefits at age 62 when your full retirement age is 66, your monthly benefit will be about 75% of your full-age benefit. So if you expected your monthly benefit to be $1,000 per month at 66, you would only receive around $750 at 62.
Is it better to retire at 62 or 67?
Don't worry, retiring at 62 and claiming your benefits until you're 67 does have its benefits. Retirees who begin collecting Social Security at 62 instead of the full retirement age can expect their monthly benefits to be 30% lower. Delaying claiming until the age of 67 will result in a larger monthly check.
Early Retirement and Social Security
Retire Now, Claim Later?
- You can always take early retirement and still wait to begin your Social Security benefits. That is a particularly important strategy for married couples who want to make sure the surviving spouse gets a larger benefit later in life. The highest monthly benefit between you and your spouse is what will become the survivor benefit amount when one of you passes—at that point, you'll only …
Part-Time Work May Reduce Pay
- If you plan on working part-time during early retirement, you may find your Social Security benefits reduced. The reduction is based on something called the "Social Security earnings limit," and it only applies if you have not yet reached full retirement age. If your income is higher than the earnings limit, your benefits will be reduced. This reduction only applies until you reach your full …
Your Birth Year and Your Fra
Fra of 65
- The cohort of people whose FRA is 65 have all reached that age and are all now eligible to receive their full monthly payment. If they retired before 65, their monthly benefit was reduced by the percentages below at each listed retirement age.3 1. 62: 20% 2. 62 + 1 month: 19.4% 3. 62 + 2 months: 18.9% 4. 62 + 3 months: 18.3% 5. 62 + 4 months: 17.8% 6. 62 + 5 months: 17.2% 7. 62 …
Fra of 66
- The cohort of people whose FRA is 66 exactly have all reached that age. If these people retired early, their monthly payment was reduced by the percentages below at each listed retirement age.4 1. 62: 25% 2. 62 + 1 month: 24.6% 3. 62 + 2 months: 24.2% 4. 62 + 3 months: 23.7% 5. 62 + 4 months: 23.3% 6. 62 + 5 months: 22.9% 7. 62 + 6 months: 22.5% 8. 62 + 7 months: 22.1% 9. 62 …
Fra of 67
- If a person in the cohort of people whose FRA is 67 plans to retire early, their monthly payment will be reduced by the percentages below at each listed retirement age.5 1. 62: 30% 2. 62 + 1 month: 29.6% 3. 62 + 2 months: 29.2% 4. 62 + 3 months: 28.7% 5. 62 + 4 months: 28.3% 6. 62 + 5 months: 27.9% 7. 62 + 6 months: 27.5% 8. 62 + 7 months: 27.1% 9. 62 + 8 months: 26.7% 10. 62 + 9 mont…
Fras of 66 Years and Some Months
- If you were born in 1955 and plan to retire early, you can visit SSA's retirement planning toolto determine how much your monthly benefit will be reduced by based on your retirement age. To calculate the reduction in benefit, subtract the "reduced to" percentage from 100. For the same information for birth years from 1956 to 1959, replace 1955 in t...