Social Security Early Retirement

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on September 07, 2023

Are You Retirement Ready?

Definition of Social Security Early Retirement

Social Security early retirement is a program that allows individuals to begin receiving Social Security retirement benefits as early as age 62.

This is earlier than the full retirement age, which is the age at which individuals can receive their full Social Security retirement benefits.

When an individual takes Social Security early retirement, their monthly benefit amount is reduced from what it would have been if they had waited until their full retirement age to begin receiving benefits.

The reduction in monthly benefits is calculated based on the number of months between the individual's age at the time they begin receiving benefits and their full retirement age.

Eligibility for Social Security Early Retirement

To be eligible for Social Security early retirement, individuals must meet certain requirements.

Age Requirements

The age at which you can start receiving Social Security benefits is called the Full Retirement Age (FRA). The FRA varies depending on your year of birth and is typically between 66 and 67 years old.

However, the SSA allows individuals to start receiving benefits as early as age 62, although at a reduced amount.

Work History and Social Security Credits

To be eligible for Social Security benefits, you must have earned a specific number of Social Security credits throughout your working career. Credits are earned by working and paying Social Security taxes.

The required number of credits for early retirement is typically 40, equivalent to approximately 10 years of work.

Strategies for Maximizing Social Security Early Retirement Benefits


Delaying Social Security Benefits While Retired

One strategy for maximizing benefits is to retire early but delay claiming Social Security benefits until your FRA or later. This approach allows your benefits to increase before you begin receiving them.

Working Part-Time During Early Retirement

Working part-time during early retirement can help supplement income, reduce the reliance on savings and investments, and potentially increase your Social Security benefits.

Coordinating Benefits With Spouse

Couples can maximize their Social Security benefits by coordinating when each spouse claims benefits. This may involve one spouse claiming benefits early while the other waits until their FRA or later.

Evaluating Breakeven Points for Social Security Benefits

Understanding the breakeven points for Social Security benefits can help you determine the optimal time to claim benefits based on your personal circumstances and financial goals.

Benefits of Social Security Early Retirement

Flexibility in Retirement Planning

Early retirement offers individuals more flexibility in their retirement planning. It allows them to choose when they want to retire and provides the freedom to pursue personal interests, and hobbies, or even start a new career.

Opportunity for Early Career Transition or Pursuing Personal Interests

Retiring early gives individuals the chance to transition into a new career, start a business, or devote more time to personal interests, such as volunteering or traveling.

Potential for Better Health and Quality of Life

For some people, early retirement may lead to improved health and quality of life. Reduced work-related stress and increased leisure time can contribute to a healthier and more fulfilling lifestyle.

Drawbacks of Social Security Early Retirement

Reduced Social Security Benefits

The most significant drawback of early retirement is the reduction in Social Security benefits. When you claim benefits before your FRA, your monthly benefit amount is permanently reduced. The reduction depends on how many months before your FRA you begin receiving benefits.

Limited Income Sources

Relying solely on Social Security benefits for income during early retirement may be challenging. Other sources of income, such as pensions or investments, may not be accessible or sufficient to cover living expenses during this time.

Possible Strain on Personal Savings and Investments

Early retirement may put a strain on personal savings and investments, as individuals will need to rely on these resources for a longer period.

Health Insurance Considerations

Medicare Eligibility

Medicare eligibility begins at age 65, which means early retirees may need to find alternative health insurance options until they are eligible for Medicare.

Alternative Health Insurance Options

Early retirees may need to explore alternative health insurance options, such as purchasing private insurance or continuing coverage through a spouse's employer.


Importance of Financial Planning for Social Security Early Retirement

Assessing Personal Savings and Investments

Before considering early retirement, it is essential to evaluate your personal savings and investments to ensure they can provide sufficient income throughout your retirement years.

Creating a Realistic Retirement Budget

Developing a realistic retirement budget can help you determine whether early retirement is financially feasible. Your budget should account for living expenses, healthcare costs, taxes, and discretionary spending.

Understanding Tax Implications

Early retirement may have tax implications that should be considered when planning your retirement. For example, withdrawing from certain retirement accounts before age 59½ may result in penalties and additional taxes.

Seeking Professional Financial Advice

Consulting a financial advisor can be beneficial in preparing for early retirement. A professional can help you develop a comprehensive retirement plan, assess your financial readiness, and guide you in making informed decisions about Social Security benefits and other financial matters.

Final Thoughts

Social Security early retirement allows individuals to receive benefits at 62, but the monthly benefit amount is permanently reduced.

Individuals must have earned a specific number of Social Security credits and meet age requirements to be eligible.

Strategies for maximizing benefits include delaying Social Security benefits while retired, working part-time during early retirement, coordinating benefits with a spouse, and evaluating breakeven points.

Early retirement offers flexibility in retirement planning, opportunities for early career transition or pursuing personal interests, and potential for better health and quality of life.

The drawbacks include reduced Social Security benefits, limited income sources, and possible strain on personal savings and investments.

Financial planning is crucial, including assessing personal savings and investments, creating a realistic retirement budget, understanding tax implications, and seeking professional financial advice.

Social Security Early Retirement FAQs

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.

Meet Retirement Planning Consultants in Your Area

Find Advisor Near You