A lot of people save money aggressively during their working years so they're able to retire early. Others, though, end up retiring early not because they want to, but because they have no other choice.
No matter which camp you end up falling into, if you find yourself staring down retirement in your early 60s, you may be in a position where you can claim Social Security right away. Once you turn 62, you're able to start receiving your monthly benefits.
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But there's a big downside to claiming Social Security when you're that young. For each month you file for benefits ahead of your full retirement age, those monthly checks get reduced on a permanent basis.
If you were born in 1960 or later, your full retirement age for Social Security is 67. Filing at 62 means slashing your monthly benefits by about 30% for life.
The good news, though, is that you may be able to avoid claiming Social Security right away if you end up retiring early. Here are some possible workarounds.
1. Tap your nest egg
Not everyone manages to enter retirement with a large pile of savings. But if you've done a good job of accumulating a nice IRA or 401(k) plan balance, then you may have the option to hold off on Social Security after retiring early and live off of your savings for a few years instead.
Of course, the risk in doing so is depleting your nest egg too quickly. But if have a nice amount of money, the market is up, and your portfolio is doing well, then it may be feasible.
2. Work part-time
Just because you're retired from your full-time career does not have to mean that work is off the table completely. You may find that if you get creative, you're able to cobble together an income through gig work or consulting that allows you to cover your bills and wait on Social Security.
Let's imagine you retired at 62 because you were incredibly burned out and your job was hurting your health. It may not be feasible for you to go back to that sort of setup. But if, instead, you're able to consult in your former field in a less stressful manner, you may be able to tide yourself over financially for a few years until you can claim Social Security at a later age and avoid a massive reduction in benefits.
3. Turn your home into an income stream
If you own a home that's appreciated a lot in value, you may have options for generating income that allow you to wait on Social Security. For one thing, you could look to downside and use the proceeds from your home sale to cover your living costs for a few years.
If you want to keep your home, you can potentially rent out a room or two for enough money to cover your basic costs. Or, you may be able to strategically rent out your home during periods when you won't be using it. This could work well if your home is in a desirable vacation area or located in a city that tends to attract a lot of tourists.
Think through your options
Claiming Social Security early means slashing your monthly benefits for the rest of your retirement. And that may not be ideal.
Instead of assuming that's your only choice, look at other options. You may find that you're able to hold off on Social Security -- if not all the way until full retirement age, then at least an extra year or two, which could help minimize the extent to which your benefits are reduced.
