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Are you planning to retire early? As in, before you've reached what the federal government considers your full retirement age and before you've earned the right to collect 100 percent of your Social Security benefits?

You may be preparing to leave the work world by choice. Perhaps you're looking forward to traveling, hobbies and spending more time with your family and friends while you can still keep up with them. Or perhaps you'll be leaving a beloved, but strenuous, job behind because you're simply worn out. In either case, before you decide when to make that move and whether you and your family are ready for it, there are a few things you should consider.

Why Do You Want to Retire?

Some honest reflection about the reasons you'd like to stop working will help you determine if it's really the right time. Under the best of circumstances, you're doing it to fulfill your own goals, with plenty of retirement savings or pension plan benefits to support you. On the other hand, you may be about to become a reluctant retiree.

If you're retiring because working is getting more difficult to manage, you may be making the right choice. But job burnout could also be a signal to contemplate a career change instead of leaving the workforce altogether.

What About Your Retirement Benefits?

If you retire and elect to draw Social Security benefits before your full retirement age, those benefits may be substantially less than they would be if you waited. The earliest you can start receiving any Social Security retirement benefits is at age 62.

Your full retirement age depends on the year you were born. Those born between 1943 and 1954 get full benefits at age 66, and the eligibility age gradually rises to 67 for those born in 1960 or later. If you're in that younger group, and you start drawing Social Security at 62, your monthly benefit amount is 30 percent lower than the full benefit. At 64, it's 20 percent lower; at 65, it's reduced by 13.3 percent.

How Will You Cover Expenses?

Before you announce your retirement, consider what sources of income you 'll have to support yourself and your family. What will happen if you encounter a financial emergency such as a serious illness, a natural disaster or a spouse losing his or her job? You'll need access to health insurance between the time you leave your workplace health plan and when you become eligible for Medicare at age 65. Some employers offer retiree health insurance. If yours doesn't, check whether a working spouse's health plan can cover you or whether you're a member of (or can join) an organization that offers a group plan.

Another cost to consider is your tax bill in the event that you have to resort to making an early withdrawal from your 401(k) or IRA. A tax penalty will usually apply if you take distributions before you reach age 59 ½. Consult with your financial advisor or accountant about how you can avoid tax penalties. For instance, the penalty may not apply if you're using the money for certain educational or medical expenses.

If your plan to retire early has covered all of these bases, congratulations! You're ready to turn in your office key or work badge and start pursuing your passions and spending more time with your family and friends.

This information and recommendations contained herein is compiled from sources deemed reliable, but is not represented to be accurate or complete. In providing this information, neither KeyBank nor its affiliates are acting as your agent or is offering any tax, accounting, or legal advice.

By selecting any external link on, you will leave the KeyBank website and jump to an unaffiliated third party website that may offer a different privacy policy and level of security. The third party is responsible for website content and system availability. KeyBank does not offer, endorse, recommend, or guarantee any product or service available on that entity's website.

Investment products offered through Key Investment Services LLC (KIS), member FINRA/SIPC and SEC-registered investment advisor.

Insurance products are offered through KeyCorp Insurance Agency USA, Inc. (KIA). KIS and KIA are affiliated with KeyBank National Association (KeyBank).

Investment and insurance products made available through KIS and KIA are:


KIS, KIA and KeyBank are separate entities, and when you buy or sell securities and insurance products you are doing business with KIS and/or KIA, and not KeyBank.

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