One of the first things that anybody should know and understand is that Social Security benefits are based on a person's earnings which are averaged out over a 35 year period and not as some are led to believe based on their last 5 years of employment. In fact social security for early retirement will only provide a person with a base level income. Also it is important to remember that social security retirement benefits are actually based on a person's income earned during their earning life rather than on what they will need when they retire. In order for this to be calculated properly the Social Security Administration (SSA) keeps a record of all a person's earnings over their working life. They then pay the benefits to this person based on the average amount that they have earned as long as a minimum number of work credits have been accumulated during their working life.

However you can if you wish start to receive these benefits from any time between the age of 62 and the actual full retirement age of 67. However, if you decide to go this route you will find that your monthly benefits will be reduced for the rest of your life. Should you take this option you will find that your benefits will be reduced by five ninths of 1% for each of the months if you retire up to 3 years before the full retirement age. However if you retirement more than 3 years before full retirement age then the reduction each month will be five twelfths of 1%. So what this means is that should you decide to retire when you are 62 then for the first 3 years (36 months) will be reduced by 20% and then the following 12 months it will be reduced by 5% so in total your social security benefits will be reduced by 25%. So if for example your full benefit should be $1,200 you will in fact only receive $900. It should also be noted that if you do decide to retire early your social security benefit will be at the reduced rate, plus with the cost of any living adjustments added on for as long as you receive social security for early retirement.