Retiring Early? Don't Assume Claiming Social Security Right Away Is Your Only Option.

Early retirement is something a lot of people dream about and plan for over many years. But not everyone who retires early wants to end their career at that point.

It's not so uncommon for people to retire early due to health issues or being forced out of a job. And often, in that situation, early retirees have to claim Social Security right away so they have income available to cover their bills.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Image source: Getty Images.

The problem, though, is that if you don't wait until full retirement age to claim Social Security, you'll reduce your benefits on a monthly basis for life. And that could lead to many years of financial struggle. So while you may be tempted to claim Social Security in conjunction with an early retirement, waiting could pay off.

Filing for Social Security right away may not be your only option

You might assume that once you retire, it's best to sign up for Social Security right away, provided you're at least 62 years old. But there may be a way around that, which could allow you to avoid a massive reduction to those monthly checks.

First, it may be possible to tap your savings for a while, even if you don't have a ton of money socked away. The Federal Reserve puts median retirement savings among Americans ages 55 to 64 at $185,000 as of 2022, the last year for which data is available.

A sum like that could easily get whittled down to nothing if you try to live on your savings alone for a good number of years. But remember, waiting on Social Security for even a year or two after retiring early could help your financial situation on a long-term basis.

Say you end up retiring at 62, but won't reach full retirement age until 67. It may not be feasible to live off of savings for five years. But you might be able to do it for one or two, letting you claim larger monthly Social Security paychecks.

It may also be possible for you to work in some capacity even after retiring early. The more money you're able to earn, the less need you might feel to claim Social Security right away.

Finally, if you own a home, you may be able to turn it into an income source by downsizing and pocketing some equity, borrowing against your equity for a period of time, or renting out a room or floor for income. Again, this isn't necessarily something you have to do for years. You may only have to do it for a bit of time to delay Social Security a little more.

Be careful when claiming Social Security early

Retiring early doesn't automatically mean your plan is to file for Social Security early. But in many cases, the first situation inevitably leads to the second.

Putting off your Social Security claim could result in larger monthly benefits for life. So before you rush to file, think about the other options you might have for making things work.

The $23,760 Social Security bonus most retirees completely overlook

If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income.

One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these strategies.

View the "Social Security secrets" »

The Motley Fool has a disclosure policy.