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Early retirement and Social Security
Old 05-22-2006, 02:14 PM   #1
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Early retirement and Social Security

How does early retirement effect Social Security? Say you were going to retire at 55 insted of 62 or 65. The reason I ask is I was talking to someone who was fortunate enough to retire in their 40's and they said they only get 40% to 50% of their benifit becauuse they figure your non working years along with your working years.
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Re: Early retirement and Social Security
Old 05-22-2006, 02:20 PM   #2
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Re: Early retirement and Social Security

There is a calculator on the SSA website (http://www.ssa.gov/planners/calculators.htm) where you can find the effect of retiring early and of having no futher earnings on your future social security benefit.

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Re: Early retirement and Social Security
Old 05-22-2006, 02:27 PM   #3
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Re: Early retirement and Social Security

The detailed calculator with the SSA gives you a pretty good feel for how it would affect you.

http://www.ssa.gov/planners/calculators.htm

Looks like ReWahoo beat me to the punch. When I ran my numbers, it didn't lower my benefit as much as I thought it would. From the 62 benefit number I received from SS, it was about a 1% deduction per year for every year you retire before the age of 62.
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Re: Early retirement and Social Security
Old 05-22-2006, 04:52 PM   #4
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Re: Early retirement and Social Security

At the present time your SS benefit is based on your best 35 years of earnings. If you have less than those 35 years when retiring then a "0" will be added for that year. It translate to about 1% (as mentioned earlier) for each year with a "0". The reason that I bring this up is using myself as an example....my social security statement shows 36 years of contributions and I am 55. I worked summers when I was a kid and it reflects that. My estimate is based upon my best 35 years - if I never work another day - it will stay the same. Depending on when you retire and what happens legislatively to SS, the impact will not be as dramatic as you might think. IMHO, the biggest issue when retiring early is healthcare cost (insurance) - I know it has impacted me more than I expected and I retired at 52.
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Re: Early retirement and Social Security
Old 05-22-2006, 05:22 PM   #5
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Re: Early retirement and Social Security

Strongly agree with the others who suggest using the SS caluculator on the SS website. Quick and easy and really helps you to understand what happens under various scenarios.

In casual conversation with friends, I'm always shocked at the misunderstandings people have regarding the basic benefit calculation.
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Re: Early retirement and Social Security
Old 05-23-2006, 04:14 AM   #6
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Re: Early retirement and Social Security

i ran different scenerios using fidelitys sophisticated retirement planner...i ran my wife and i retiring at 62 and taking early ss vs waiting to collect at 65....i figured both for living to 90/92* and me cashing out at 80 and my wife to 89....every case we got a slightly bigger monthly withdrawl or had a slightly bigger balance on the end...on 1.6 million or so in assets today we would have a best case of about 50,000 more if i died at 80 and my wife 89...to me 50,000 in 30yrs is about 5 or 10,000 today....not nearly enough incentive to wait until 65 to collect.......
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Re: Early retirement and Social Security
Old 05-23-2006, 10:13 AM   #7
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Re: Early retirement and Social Security

Because of my health, I figure age 75 for me (I use 80 for planning purposes), probably 95 for DH. We're planning on collecting SS at 62 (especially me)--unless (heaven forfend!) he's still working. If his employer weren't a state college, maybe he could do a deal like teach one semester per year just for the health insurance. Think I'll find a way to approach him on that...
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