Can You Retire Early? Here’s What to Think About First

More people are weighing the idea of stepping away from work before the traditional retirement age, but it’s a decision that comes with a lot to consider. From healthcare costs to Social Security timing to how long your savings might need to last, there’s a lot more to early retirement than just picking a date.

Before You Trade Work for Leisure…

It’s always important to get a clearer picture of what’s involved, so we’ve outlined a few important things to think about before making the leap.

Healthcare Coverage

If you leave the workforce before age 65 (Medicare eligibility age), you’ll need to secure your own health insurance. Private plans or COBRA coverage can be costly and may significantly affect your retirement budget.

Social Security Benefits

You can start claiming Social Security as early as age 62, but doing so will permanently reduce your monthly benefit. Waiting until your Full Retirement Age (FRA), or even later, results in higher monthly payments.

Income Needs & Longevity

Consider how much income you’ll need to cover daily expenses, healthcare, and unexpected costs for potentially 20–30+ years. Inflation and market changes could affect your savings over time.

Retirement Account Withdrawals

Taking early withdrawals from retirement accounts before age 59½ could trigger a penalty on top of regular income tax, unless you qualify for an exception.

Lifestyle Expectations

Retirement isn’t just about finances. It's also about how you’ll spend your time, maintain social connections, and stay mentally and physically active.

New Full Retirement Age (FRA) Update for 2025

Another important thing to factor into your retirement plans: The U.S. Social Security Full Retirement Age is increasing.

• As of May 2025, people born in 1959 will reach their Full Retirement Age at 66 years and 10 months. [1]

• People born in 1960 or later will reach FRA at age 67. [1]

• FRA will continue to gradually rise for younger generations.

Why Does This Matter?

Your FRA is the age at which you can receive your full Social Security benefit without a reduction for early filing. Claiming before your FRA permanently reduces your monthly benefit, while delaying past your FRA (up to age 70) increases it by 8% per year. [1]

Where to Check Your FRA:

Create or log in to your Social Security account at ssa.gov/myaccount to find your personal FRA and estimated benefit amounts.

Should You Retire Early?

Retiring early can be an exciting goal, but it’s important to look at the full picture before making any big moves. Taking the time to review your income sources, healthcare options, and how Social Security timing affects your benefits can help you feel more confident about your decision to retire early or wait it out.

Still curious how the new Full Retirement Age update might affect your plans? Make sure you understand what’s changing in 2025 and how it could factor into your retirement strategy. Our retirement experts at RetireAdvisers℠ are here to provide resources and guidance to help you stay informed every step of the way.

The concepts expressed herein represent the views and opinions of Pension Consultants, Inc., and are not intended as legal, tax, or investment advice for any specific individual, account, or plan.

Source:

[1] Five changes to Social Security in 2025. Kiplinger. (2025, January 3). https://www.kiplinger.com/retirement/social-security/changes-coming-for-social-security-in-2025