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Everything you need to know about penalties for retiring and collecting Social Security benefits early

When a person chooses to retire earlier than their full retirement age, they’re hit with a penalty.

The amount you’ve accumulated during your working career is expected to last longer than it will if you choose to retire early.

Many people would like to just take that early retirement as they get closer to their full retirement age, especially when working hard makes it tempting.

Related: Social Security benefits may see a bigger boost in 2022

If this is something people choose to do, they need to know it will come with lower payments every month than they would have received by waiting.

The Social Security Administration has created a chart to help inform Americans of the penalties behind retiring early. That way, if it still seems worth it to a potential retiree, they can make their own informed decision.

Courtesy of the Social Security Administration.

Retiring early could eliminate 30% of your monthly benefits

The earliest retirement age is 62 years and one month.

Related: This rule won’t change for Social Security in 2022, and it might cost you thousands


The earlier you choose to retire before full retirement age, you’re penalized. The later you retire past your full retirement age, the more you’re rewarded. Once you reach 70 you can retire because you’re benefits will not grow any longer.

In 1983 when funding for Social Security was facing issues, the retirement age was raised from 65 to 67.

Now, those born after 1960 won’t reach their full retirement age until 67 and one month.

Related: What do I need to apply for Social Security and how long does it take to receive benefits?

People born in 1960 will be turning 62 next year, and if they retire early they will lose 30% of their benefits they won’t be able to get back.

How does the Social Security Administration calculate what your reduction in benefits will be?

For the first 36 months of retirement, each month that a person receives benefits before full retirement age is reduced by 5/9 of 1%. This equates to about 0.55% per month. Each month past 36 months a person collects retirement before full retirement age is reduced by a bit less that 0.42%.

If a person chooses to retire next year age age 62, they’ll see about 30% less per month.

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