Retire early - impact on Social Security payout?

[WynnDuffy73]

I was just playing around with the social security website and found they provided the estimated payout at age 62, 67, and 70.  Those figures are based on the assumption that you will continue to work until those ages.

Does anyone have an estimated general rule of thumb on the % reduction you would be looking at if you retired at around 55 instead?  Obviously I'm just looking for a ballpark figure in terms of the reduction. 

Would a 25% reduction of the estimated payout be a safe assumption for retiring at around 53-55 years old?

I wasn't able to use their benefit estimator feature so I was wondering if anyone has played around with the numbers. Thanks!

[Paul der Krake]

By far the most comprehensive guide to Social Security for early retirees:

http://rootofgood.com/early-retirement-social-security/

[SwordGuy]

Root of Good's article is excellent.   But you can get your earnings history from the SS website, and they also have a worksheet you can fill out with that info to calculate your payments.  Just fill in the years after you retire with big fat zeroes.

You'll discover that the difference isn't as big as you would think it is.

That's because high and middle income earners heavily subsidize low income earners.

[kpd905]

If you find your earnings record, you multiply each year by an index factor for inflation.  Those numbers are here: https://www.ssa.gov/cgi-bin/awiFactors.cgi

When you have your total indexed earnings, divide by 420 to get your average monthly earnings over a 35 year period.

Then you find out how much your monthly payment will be using the following bend points:

(a) 90 percent of the first $885 of his/her average indexed monthly earnings, plus
(b) 32 percent of his/her average indexed monthly earnings over $885 and through $5,336, plus
(c) 15 percent of his/her average indexed monthly earnings over $5,336.

This assumes you start taking it at your full retirement age.  If you take it earlier or later you need to adjust this answer.

As you can see, due to the progressive nature of the bend points your payment will be reduced by less than you might have thought.

[WynnDuffy73]

Great info.  Thanks guys.

[MDM]

See the 'SocialSecurity' tab in the case study spreadsheet if you want to see formulas and a chart with the two bend points showing your position.

The anypia.exe from the ssa.gov website remains as close to a definitive source as one can get, short of applying for the actual benefits.

[VolcanicArts]

I will probably be retiring in the next 5 to 7 years at my current rate. Realistically I'm just looking at SS as a bonus and assume there won't be any. I will also be taking SS at exactly 62 if it is there. One thing I've found throughout my life is you can't depend on the government for anything. They are always changing laws abruptly in a way that financially screws over those most in need, especially with healthcare, social security, or anything else that would provide you a safety net. It seems the game is to make you reliant on having to work for necessary benefits so you have to pay large amounts into their system, which they subsequently waste on something that will never directly benefit you. My goal is simply to work hard and smart and I have a chance of escaping this rat race without any reliance on anything but my own plan and hard work.

[BTDretire]

I was just playing around with the social security website and found they provided the estimated payout at age 62, 67, and 70.  Those figures are based on the assumption that you will continue to work until those ages.

Does anyone have an estimated general rule of thumb on the % reduction you would be looking at if you retired at around 55 instead?  Obviously I'm just looking for a ballpark figure in terms of the reduction. 

Would a 25% reduction of the estimated payout be a safe assumption for retiring at around 53-55 years old?

I wasn't able to use their benefit estimator feature so I was wondering if anyone has played around with the numbers. Thanks!

I believe this calculation is available on the SSA.gov website.
https://www.ssa.gov/retire/estimator.html
 Oh, I see you tried, odd, I tried a few days ago and was FORBIDDEN:
 But today, while trying to find the link for you, I got in.
 They make it difficult, in that you need to enter all your information, even though
you must log in, and they know all your info. Stupid!
 But you can enter estimated income for future years, although from 2018 on it is the same number.

   When I couldn't get in, I called SS and waited 3 minutes (lucky?) and found a very helpful agent.
 I found if I continue earning at my same rate I will have no increase in my SS benefit. I have 35 years
of earnings that are above what I earn now. (Actually 5 more years at my same income, increased my
benefit about $20 a month.
  This is useful because my wife and I have a small business and I can shift income to her. It will benefit
her because she will gain from the extra earnings.
She still needs to log in to see what difference it makes to her benefit.