Social Security Retirees Face Unexpected Downside of Early Retirement

Core Insights - Early retirement can lead to significant financial consequences, particularly affecting Social Security benefits due to reduced savings and fewer working years [1][2]. Group 1: Impact on Social Security Benefits - Claiming Social Security benefits before age 70 can reduce monthly income due to early filing penalties or missing out on delayed retirement credits [2][4]. - The benefit formula for Social Security is based on the average wages over the 35 highest earning years, which can be negatively impacted if an individual works less than 35 years, resulting in $0 wage years being included in the calculation [4][5]. - Early retirement while earning a higher salary can prevent the replacement of lower-earning years, thus lowering the average wage used to calculate Social Security benefits, leading to smaller checks for life [6]. Group 2: Working Years and Benefits - Working for at least 35 years can enhance Social Security benefits, making it advisable for individuals to consider this if feasible [9]. - The decision to retire early should take into account the potential for reduced benefits, which may not be immediately apparent to many retirees [8].