Early Retirement
Social Security Benefit...

or Should You Wait Longer?

How will your early retirement affect your Social Security benefit later?

Your earliest Social Security payment can begin at age 62... unless you take a Social Security Disability Benefit or a Social Security Survivor Benefit.

Social Security did increase the "full retirement age" but not the earliest eligibility age... and that's good!

Your Social Security payments will be less if you retire earlier.

That makes sense as you draw the benefit a few years earlier (age 62 to 65-66) so you take a lifetime payment reduction for the opportunity to draw the benefit earlier. You also earn less... you could have had more years of earnings or higher earnings, both of which increase the benefit itself. Even a few years makes a difference in your lifetime income!

Should you consider working longer, for a larger benefit at 63, 65, 66 (or even later)?

If you have a pension, or investments, maybe you can start Social Security early, as you don't need as much income as someone with only Social Security payments... but if not, think twice as your later years might be pretty darn tight. The reduction can be a big hit to your lifelong payment, and every little bit helps later when you are on a fixed income, right?

What many don't realize is that Social Security uses 35 years of earnings to calculate your benefit.

Many people believe that Social Security uses your last five years of earnings to determine your benefit - that is wrong. This means that if you didn't work 35 years, and ten years of zero earnings. If you worked 25 years, they will use 25 years of your actual earnings and five years of zero earnings. For example, a woman who stayed home to raise her kids might have 20 years of earnings (age 35-55 for example) and 15 yrs of $0 earnings...

Early Retirement of the Main Wage Earner

More than 40% of women depend on Social Security for their income. Many more women, compared to men, depend on only Social Security - and it hurts them to live on this income.

If the main wage earner (usually the man of the family) chooses to begin retirement benefits early, at age 62, and if he dies first, the spouse does receives his benefit -- but she gets his reduced age 62 benefit for the rest of her life.

If he had remained employed longer, without taking an early retirement and early Social Security payments, she would receive increased Social Security benefits for the rest of her life (especially since the surviving spouse is left with one Social Security income, not two).

It may not matter, if the deceased worker also left a pension to the spouse, but if the Social Security is the only income... working even a year or two past age 62, helps with a higher lifetime payment.

Annual Social Security Statements

Every year, You receive an estimate from Social Security a few months before your birthday. If you stopped working at an early age, say age 53, and you hope to never work again before Social Security benefits start at age 62... please don't rely on that benefit statement. You should use the online benefit calculators or request a new estimate showing what happens to your benefit if you don't work from 52-62... if not, they assume your income will continue.

Disability Retirement Eligibility and Early Retirement

Another big concern, for me (and other early retirements), is that IF you retire early, under normal circumstances, and IF you never work again... you could be excluded from eligibility for a Social Security Disability benefit, if you were ever in need of one. Read this warning...

More on Social Security Applications...
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