early retirement
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For many, retiring early is the ultimate dream. However, the decision to retire early should be carefully planned because of its potential implications on the availability and amount of social security benefits. 

In short, the earlier a person retires the lower their social security payment will be every month. While social security benefits are a complex formula and every situation is different, a person will usually receive the highest benefits by earning the most he or she can during a 35-year period and then waiting to draw on social security until reaching the age of 70. Consequently, early retirement will usually result in lower social security benefits. 

To better understand how early retirement effects social security, it is important to first understand how social security benefits are determined. Social security benefits are calculated based on how long a person has worked, how much a person has earned, and the age he or she files for benefits. 

Here is a breakdown of how each factor could be impacted by the decision to retire early: 

1. How long a person has worked
In order to qualify for social security during retirement, a person must pay a minimum number of “credits” into the federal program during their work history. A credit is earned for every quarter of the year that a person has worked and a total of 40 credits are required to qualify for social security. Basically, this means a person must work at least ten years before being able to draw on social security during retirement. 

For many people considering early retirement, this will not be a problem. However, for the person that has not worked the required ten years, retiring early would reduce any potential social security benefits to nothing. 

2. How much a person has earned
Social Security benefits are calculated by averaging the 35 years when the person earned the most money. Not incidentally, the years when most people reach the peak of their careers are also the same years that early retirement is most appealing. By retiring early, a person loses the opportunity to earn these higher salaries. Therefore, the 35-year salary average and thus social security benefits could be lower than if the person had chosen to continue working instead of retiring early. 

Conversely, there is also a “cap” on the high-end of social security payments. For 2017, a person could not draw more than $127,000. Therefore, if a person on the high-end of the income scale had already reached this benefit level, early retirement would not affect their social security payments at all. 

3. The age a person files for benefits
A person can begin drawing on social security at the age of 62, however, they will receive less than if they had waited until reaching their “Full Retirement Age” or FRA. The FRA depends on when a person was born. For Americans born in 1943 or later, the FRA is typically 66 or 67. If a person were to wait past their FRA before drawing on social security benefits, the amount will go even higher until he or she reaches the age of 70. 

About the Author
Carey Thompson has been practicing Social Security Disability Law since 2008 after he graduated from Texas Wesleyan School of Law, now known as Texas A&M school of Law in Fort Worth, TX. While at Texas Wesleyan he served on Law Review. Prior to going to Law School, Mr. Thompson was a High School Band Director for four years using his degree in Music Education from Michigan State University. Prior to Attending Michigan State, he attended Aledo Schools from Kindergarten to graduate. Mr.Thompson feels strongly about serving the people of Tarrant County.

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