early retirementEarly retirement is a fantasy for most of us.  Sure, it is possible to retire early if you are able to plan—and effectively implement that plan—at a far enough point away from your retirement date. Of course, this is not easy in today’s economy.

For some people, cashing in on social security may be the optimum strategy for retiring early. The latest data, though, might recommend that this is not such a great idea after all, however.  Hating your job is the number one reason people retire early, but this data suggests you should stick it out for as long as you possibly can, and here’s why:

Less Time To Save

Once you start your retirement years you are no longer able to save for your retirement years.  Sure, you may have started in your 20s—when your responsibilities were low—and you may have developed a solid habit of saving in your 30s and into your 40s as you grew your family.  When you reached your 50s and your kids were out of college, you might have started saving more again.

But many people—even those who manage to stay at a single career for most of their life—don’t really start earning a significant paycheck until late in their life.  So if you retire early not only are you cutting off the ability to earn more money—and save it—you might also be stopping the supply of liquidity before it actually matures.

Fewer Social Security Benefits

The idea of cashing out your social security benefits is a beautiful one but living on these benefits before it is absolutely necessary means that you are no longer earning social security benefits. This means your social security income is limited not only in your monthly allotment (by as much as 25%) but also in the number of years you can use it.

Putting this into perspective: if you are eligible for $1,500 of Social Security every month, at the age of 66, if you cash out the earliest possible age (of 62) you will lose 25% a month.  That means your $1,500 is now $1,125.

In addition, healthcare costs continue to rise, as are living expenses.  If you are no longer working you won’t have employer health insurance and that loss of nearly $400 a month—four years early—could actually mean life or death.