Retiring early is the dream of many workers who want to spend more time pursuing personal interests and less time on the job later in life. Whether retiring early is a realistic possibility depends on your financial situation, including the benefits you stand to earn if and when you do retire. Some workers can expect partial benefits at age 50, which may make an early retirement possible.
Social Security Benefits
One of the major hurdles to early retirement is living without Social Security benefits. At age 50, workers who are not disabled do not qualify for any form of Social Security benefits. The age at which you qualify depends on when you were born, but as of 2012, the earliest a retiree can receive even reduced benefits is age 62 and 1 month. Retiring at age 50 means you'll need savings or access to other early retirement benefits until Social Security payments start to arrive between 12 and 17 years later.
The benefit you stand to earn from your employee pension depends on your employer's policies and how long you've worked for the company. Most businesses use a combination of age and service time to calculate early pension benefits. In some cases you may not be eligible for any pension at age 50. In other cases, such as if you've worked for the same company for many years or have a guaranteed pension due to your membership in a labor union, you can expect partial pension benefits at age 50 that will rise with each additional year you wait to retire.
Retirement savings plans, such as 401k plans and individual retirement arrangements, can provide benefits at age 50 for early retirees. However, taking early disbursements from a retirement savings plan subjects you to a special 10 percent tax. This tax applies whenever you take money out of a retirement plan before reaching age 59 1/2, unless you qualify for an exception. If you have a very large amount of retirement savings, you may be able to pay the tax and still receive enough income to retire comfortably at age 50.
Certain exceptions allow workers who retire at age 50 to access retirement plans without paying a tax, or receive Social Security benefits as early as age 50. In the case of Social Security, early benefits are available for workers who become disabled and can no longer hold any type of job. Early retirees can access the money in IRA and 401k plans without additional tax penalties if they are disabled, use the money to pay for a family member's college education or to buy a home for the first time. These early distributions have a $10,000 annual limit.