Retirement Planning

Will I Lose Social Security Benefits If I Retire Early?

Retiring early could have financial implications such as a reduction in your Social Security benefits. In many cases, your retirement benefit could be larger if you wait. 

Deciding When To Retire

Should I consider early retirement?

Many Americans are confronted with financial challenges when deciding whether or not to retire early. One challenge in particular is if a possible reduction in their Social Security benefits is worth walking away from work before they reach full retirement age (FRA).

In order to make such an important decision, you need to look at the financial impact an early retirement can have on your Social Security benefits. Once you have the numbers, you can see if delaying retirement by a few more years is worth being able to retire early.

What is full retirement age?

The full retirement age or "normal retirement age" used to be set at age 65. Today, that age has since increased to age 67 for people born after 1959. To determine your FRA, use the Social Security Administrations (SSA) retirement age calculator.

The longer you wait, the bigger the benefit

You Social Security retirement benefits will be increased by a certain percentage (depending on date of birth) if you delay your retirement until you reach your full retirement age. At full retirement age your benefit is 100% of your Primary Insurance Amount.  When you reach age 70, the increase will cease - even if you continue to delay taking your benefits.

The following chart indicates the monthly and annual rate of increase you may be able to receive by waiting until you reach your FRA. 

Increase for Delayed Retirement
Year of Birth* Yearly Rate of Increase Monthly Rate of Increase
1933-1934 5.5% 11/24 of 1%
1935-1936 6.0% 1/2 of 1%
1937-1938 6.5% 13/24 of 1%
1939-1940 7.0% 7/12 of 1%
1941-1942 7.5% 5/8 of 1%
1943 or later 8.0% 2/3 of 1%

Note: If you were born on January 1st, you should refer to the rate of increase for the previous year.
Source: Social Security Administration, 2015

Knowing when to say when

If you're still trying to decide if taking an early retirement is a financially feasible option for you, you may be getting a lot of advice on collecting benefits as early as age 62, or waiting until after you have reached your FRA. Because your situation is different from anyone else's, it's best to do your homework first, and then discuss with a financial professional the best options for you.

For more information on how to retire early, and articles discussing how to start saving for retirement, visit the Protective Learning Center.

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