Social Security Questions? Ask a Social Security Expert
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Yes, if you have not met your full retirement age (age 66 is full retirement age in 2016) then your benefit will be reduced with the early retirement penalty. You would still get the annual COLA and other than the early retirement reduction (which will be explained below), there is no other penalty.
From the social security website: https://www.ssa.gov/planners/retire/retirechart.html
"If you start your retirement benefits at age 62, your monthly benefit amount is reduced by about 30 percent. The reduction for starting benefits at age 63 is about 25 percent; 64 is about 20 percent; 65 is about 13.3 percent; and 66 is about 6.7 percent."
So you will lose 13.3% permanently. Although you can suspend your benefit at full retirement age and gain about 8% per year from age 66-70.
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