Some people choose to retire early so that they can enjoy their lives earlier. The problem is having enough money to do this.
The younger you are when you retire and apply for Social Security, the more money they will cut off your checks.
People who leave the workforce often have to apply for Social Security benefits in order to have enough money to survive.
Related: Social Security: When Will Recipients See the COLA Increase in Their Checks?
Retiring early will also cause you to lose that income that you might have saved for early retirement.
To survive, you may need to claim benefits before your full retirement age of 66 or 67, depending on the year you were born.
Filing early will result in penalties on your checks, which will end up being about 6.7% less for each year before the full retirement age you applied for. If you retire at age 64, that’s a drop of 6.7% for three years. The maximum amount you can lose is 30% if you retire as early as possible.
Related: Social Security: 5 things to do before claiming benefits
This penalty is also permanent, so unless there is another source of income or savings, it may not be the best option.
If you pass away and your spouse has to receive survivor benefits, you have also drastically reduced the amount they would receive.
The best way to make the decision is to consider your finances and lifestyle ahead of time and decide if you can survive that cut in payments. If so, it may also be a better option to retire early to have more time.
Related: Social Security: Losing Income? Recipients can lower Medicare payments
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