The benefit payments you get from Social Security are dictated by how much you’ve been able to make during your entire working career. Higher benefits come from higher overall lifetime earnings, and relatively smaller benefits from years of low income. If you didn’t work for some years, the amounts you get in terms of Social Security benefits may be much smaller than if you’d worked continuously. Retirement benefits can also be affected by your age when you retire, also known as your “stop work” age, or when you leave the labor force for good.
There are many reasons why seniors retire from work earlier than the normal age of retirement. Health problems can be one reason why you wish to retire early, as your medical conditions may no longer allow you to work, or make it difficult for you to do so. In this case, you can apply for disability benefits under Social Security, which can give you benefit payments equal to full and unreduced retirement benefits for the normal age of retirement. Disability benefits you receive prior to retirement can be converted to retirement benefits once you’re at full retirement age.
Retiring before the normal retirement age set by Social Security will result in a reduction of benefits which depends on your age. You can start cashing out your retirement benefits once you reach the stop work age of 62, at the earliest, although this is understood as retiring before the full retirement age. Retiring at 62 can result in a deduction of a fourth of your overall benefits compared to retiring at full retirement age, for example.
Your retirement benefits are based on 35 years of highest earnings within your entire working period, as well as the age when you start receiving Social Security benefits. If you stop working before the 35 years are complete, the years without income will significantly lower your retirement benefits when averaged out.
Although you may be able to get benefits equal to what you’ll get at full retirement age with disability benefits, how can you guard against low Social Security benefit payments if you don’t qualify for disability? You will receive full benefits if you retire at the age of normal retirement and complete the required 35 years, otherwise, you’ll receive less than you expect. If you need to retire early, know how much you can get by going to the Social Security website or contacting your financial planner.
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