Should You Retire Early With Social Security on the Verge of Insolvency?

You worked hard, saved dutifully, and hit the savings targets that would enable you to retire early. Then, you got the news that Social Security is just six years from a 22% benefit cut. Suddenly, your whole plan felt uncertain.

You want to retire early, but you also want to retire comfortably, and you'd rather not choose between the two. While everyone's situation is unique, there's one key factor everyone should weigh when deciding whether early retirement is still the right move.

How much does Social Security factor into your retirement plans?

Whether retiring early still makes sense to you depends on the role you expected your Social Security benefits to play in your budget. If you expected it to be a major source of income for you, it might be worth waiting to see what's next for the program before you leave the workforce. If it was only intended to be a minor supplement to your personal savings, you might be just fine.

If it helps, think about the worst-case scenario where you get 22% less per month in Social Security benefits than you were expecting. Would you still be able to enjoy the retirement lifestyle you hoped for? If the answer is no, it's probably worth working a while longer before retiring so you have time to save more.

Or you could consider a phased retirement where you gradually reduce your hours in the workforce rather than quitting all at once. This reduces how much you have to draw upon your personal savings right now, while allowing you to enjoy some of the freedoms of retirement.

What to do if you're worried about retiring early

If you're not comfortable retiring early in light of Social Security's impending shortfall, that's OK. Continue to work and save until the government announces how it intends to change the program.

Once you know what kind of benefit you can expect in the future, you'll be able to redo your retirement plan to check whether that amount will be enough to supplement your personal savings. If it is, you can retire at your earliest convenience.

If your Social Security benefits won't go as far in the future as you'd hoped, you may have to remain in the workforce a while longer. That's not ideal, but it's better than draining your savings sooner than expected.

The Motley Fool has a disclosure policy.