How to Apply for Early Retirement in 5 Simple Steps

Your guide to sipping on a piña colada on the beach before the retirement age.

Reviewed by Chris Leitch

How to apply for early retirement

For many workers, the idea of early retirement can serve like an oasis in the middle of a desert. With workplace stress on the rise (global organizational consulting firm Korn Ferry reports a 20% increase in three decades), getting away from the office for good sounds heavenly to many.

If you’re dreaming of withdrawing from the grind, putting up your feet and enjoying ample free time, read on: here are the steps you need to take to retire early, as well as some things you should bear in mind, such as how retirement benefits reductions work.

What is the retirement age?

The retirement age in the US varies by age group, and is set between 66 and 67 years, depending on the retiree’s birth date. For those born in 1960 and later, the full retirement age (FRA) is 67; for those born in 1959, it is 66 and 10 months; and it decreases proportionally for people born in earlier years.

People can still claim their retirement benefits as early as age 62, although this results in reduced benefits.

Can I get any benefits if I retire early?

Workers who have not yet reached FRA can still start receiving their Social Security retirement benefits at the age of 62. This, however, reduces the benefit amount by a certain percentage for each month before your full retirement age. As such, the percentage is also determined by the year you were born in.

Someone born in 1962, who is 62 years old in 2024, can start claiming their retirement benefits with a 30% reduction — meaning that a monthly benefit of $1,000 will become an installment of $700. This percentage ranges from 25% to 30% depending on the beneficiary’s date of birth.

How to apply for early retirement

Retiring early has its benefits as well as some downsides. Here are some steps you can take to ensure that your decision aligns with your needs and some tips on what you’ll need to apply for early retirement benefits.

1. Understand retirement benefits reductions

Reading and understanding the Social Security reductions that will apply for you if you retire before you reach FRA is the first step to effectively weighing the pros and cons of the decision. The same goes for your 401(k) plan: the IRS currently allows penalty-free withdrawals only by those aged 59½ or older.

Knowing what compromise you’ll be making (financially speaking) will allow you to make more accurate calculations when planning out your future. Speaking with a financial advisor here may be wise, as there is no one-size-fits-all when it comes to retirement: how much money you’ll need to save will entirely depend on your needs, preferences and personal goals.

2. Determine if you need a backup plan

Many people (though not as many as in previous decades) retire early. Though those that retire between the ages of 40 and 59 are far fewer than those retiring once they reach 60 years of age or older, they still exist — meaning that it can be done.

How early you’re able to retire and what you intend on doing with your time as a work-free person is something only you know. Your lifestyle as a retiree can largely determine how much money you’re going to need; however, personal finance company NerdWallet makes the following suggestion: aim to have at least 70% of your pre-retirement income once you’ve retired.

If you still have some years of employment left ahead of you, you may want to start looking into generating passive income if you haven’t already, or finding a better-paying job or investing some of your money.

The sooner you start the process of looking ahead, making calculations and saving as much as possible, the better prepared you’ll be to hand in your (final) resignation and enjoy life on the other side of the 9-to-5.

3. Discuss your retirement with your boss

Though you’ll want to have this discussion with your boss early on, it’s important to strike a balance between giving them enough time to find and train your replacement and spilling the beans too early, in a manner that negatively impacts the rest of your time at the company.

First of all, determine what your employer’s retirement policy says about handing in your notice; timeframes vary from company to company. While you’re at it, you may want to schedule a meeting with your HR department, too, to work out whether there are any retirement benefits you might qualify for.

Generally speaking, announcing your plan to retire between one and six months in advance is fairly standard. If your employer doesn’t specify exactly what they prefer, consider your position within the team. If you hold a key role, and your team relies on you heavily, you may want to consider giving them a good heads-up.

4. Gather all the information you’ll need

The Social Security Administration categorizes the information you’re going to need to provide into “information about you” and “information about your work”.

The first group includes but is not limited to:

  • Your date and place of birth
  • Your social security number
  • Your citizenship status
  • The names of any unmarried children under the age of 18
  • Whether you’ve ever filed for Social Security benefits, Medicare or Supplemental Security Income

The information you need to provide regarding your work history, on the other hand, includes:

  • The name and address of your most recent employer
  • The amount you earned this year and the year before
  • Whether you’ve earned any Social Security credits under another country's social security system

Before you contact your local Social Security Office, familiarize yourself with the type of information you’ll be expected to share to make the process quicker and smoother.

5. Contact Social Security

After you’ve made your decision, spoken to your boss, and gathered all relevant information, it’s time for the final step: applying for early retirement with the Social Security Administration.

The process can be done online via the Social Security portal, by contacting Social Security by phone, or by visiting your local Social Security office in person. You can apply up to four months in advance to the date you wish to start receiving your retirement benefits.

At the same time, financial services company Bankrate recommends allowing at least six weeks for your application to be processed.

Documents you may need

According to the Social Security Administration, you may be asked to provide the following documents when looking to claim early retirement benefits:

Original birth certificate

A copy of your birth certificate will also be accepted so long as it’s certified by the issuing agency.

Proof of citizenship

If you were born in the US, then your birth certificate counts as proof of citizenship. Other accepted documents include US passports, naturalization certificates and Department of State certificates for US citizens born overseas.

A copy of your W-2 form

Besides your Wage and Tax Statement (or in place of it), you may also need your self-employment tax return.

Key takeaways

Many people eagerly anticipate their retirement, intending to catch up on all sorts of things they have little time for when in full-time employment. From picking up new hobbies to volunteering, traveling and resting, retirement often becomes synonymous to enjoying a slower pace of life.

To summarize what we talked about:

  • Receiving Social Security benefits for early retirement reduces your monthly benefits amount. Waiting until age 70 to claim them, meanwhile, increases the monthly amount.
  • Warning your employer that you’re planning on retiring should happen one to six months before your final day in the workplace.
  • Retirement applications may take up to six weeks to be processed, so start the process as soon as you have a specific date in mind for when you want to begin receiving your benefits.

Do you intend to retire soon? How do you wish to spend your retirement? Let us know in the comments section below!

Originally published on January 18, 2019.