Retiring early may reduce your Social Security benefits. Here why. | Smart Change: Personal Finance

But there’s a less obvious drawback to early retirement that many seniors don’t think about until it’s too late. And it can leave you with much less income for life.

The monthly Social Security benefit you are entitled to in retirement will be based on your earnings over 35 years of the highest wages in the workforce. But if you don’t work for the full 35 years, $0 will be credited to your personal benefit account for each year you have no recorded income.

So, let’s say you decide to retire early enough that you only have 30 years of employment left. This may result in a less generous Social Security benefit than you would like.

Now remember that Social Security is designed to pay you a monthly compensation for life. Unlike your savings, which will likely deplete in your lifetime, you don’t have to worry about running out of your Social Security benefits. So getting lower monthly interest is a move that could cause you a world of financial stress later in life.

Some people retire early because they are overworked at work and can’t stand the thought of having to work a miserable job for another five to ten years or more. If this largely motivated your decision to retire early, there may be a better solution – changing careers.

If you move into a less stressful field, you may not hate your job so much. And even if you end up taking a salary cut, you should Some Money coming in for a few extra years is better than nothing at all. This way, you can avoid having to tap your savings early, and you can add a few more years of earnings to your Social Security benefits account.

Another option to consider is cutting back on part-time work. You may like what you do, but it is demanding by nature. If you’re in your late 50s or early 60s and can’t stand the thought of clocking more than 50 hours a week, try switching to part-time work. This way, you will still have recorded income, which may help you from a Social Security standpoint.

Many people are able to retire early after working a full 35 years. But if that’s not your situation, be sure to leave the workforce at a relatively young age. Doing so could result in you receiving less Social Security — and more financial stress later in life.

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