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Social Security: If you retire early to collect benefits, you’re giving up money

Some people choose to retire early so they can enjoy their lives earlier. The issue is being able to have enough money to do this.

The younger you are when you retire and file for social security, the more money they cut from your checks.

People that leave the workforce often need to file a claim for social security benefits in order to have enough money to survive.

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Leaving work earlier also causes you to lose that income you may have been saving for early retirement.

In order to survive, you may need to apply for benefits before your full retirement age of 66 or 67, depending on the year you were born.

Early filing results in penalties on your checks, which ends up being around 6.7% less for each year before full retirement age you applied. If you retire at 64, that’s three years of a 6.7% drop. The maximum amount you can lose is 30% if you retire at the earliest age possible.

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This penalty is also permanent, so unless there’s another source of income or savings, this may not be the best option.

If you die and your spouse needs to collect survivor’s benefits, you have then drastically cut the amount they would get as well.

The best way to make the decision is to take into account your finances and lifestyle ahead of time and decide if that cut in payments is something you could survive on. If it is, then retiring early to have more time may also be the better option.

Related: Social Security: Lost income? Recipients can lower Medicare payments



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