Social Security: Is Early Retirement the Way to Go?

Social Security is perhaps one of the most interesting results of the New Deal during the great depression. Some believe that its nothing more than a very bad retirement savings program, whereas others believe that it's a safety net to keep seniors from living in poverty. Regardless about how you feel about it, you will have to pay into it whether you like it or not, and you will get money out upon retirement. Social Security is essentially a system which redistributes wealth from those who are workers to those who are retired. The Social Security Administration takes 11.2% of your income and places it in the Social Security Trust fund and then when you reach age 62 or age 67, you can retire and receive monthly payments from the Social Security Administration. Social Security also provides a disability benefit and a death benefit.

Social Security is really not a very good deal for most people mathematically. People should focus on making it the best deal they can though. Retirees have the option of taking their money at age 62 or age 67. If you take it early at age 62, you will start getting paid immediately, but have a reduced benefit for the rest of your life. If you take the full retirement at age 67, you will receive a higher payment.

Before making a decision as to whether you should take early retirement or not, we have to make sure we're taking early retirement for the right reasons. Never take out early retirement because you absolutely need the money. If this is the case, your lower social security payment is going to haunt you for the rest of your life and you will be forced to live on next to nothing until your death. Take the time, and work for an extra five years, it's not going to kill you. This way you won't have to eat beans and rice throughout all of your retirement.

Assuming your finances are in order, now we can determine whether or not it makes sense to take early retirement or not. The Social Security website offers a calculator which will help you determine which option is best. There is really only one factor to determine whether or not if it's the best option. How long do you think you are going to live? Let's say we assume we are going to live until 82, and can receive a Social Security payment of $9000 at early retirement, or a payment of $1200 at age 67. We would receive a total of $360,000 at regular retirement and a $324,000 at early retirement. You will want to use the social security calculator or call a social security representative toll free at 1-800-772-1213, which will help you determine which is the best option for you based on your income and life expectancy.