How Social Security Calculates Your Benefit
Your Social Security benefit is based on your 35 highest-earning years, adjusted for inflation. If you worked fewer than 35 years, the Social Security Administration fills in the missing years with zeros — which drags down your average and reduces your benefit.
If you retire at 55 with 30 years of work history, Social Security will use 5 years of zeros in your benefit calculation. Depending on your earnings history, this can reduce your monthly benefit by $100–$400 or more.
The Earnings Test: Working While Collecting Before Full Retirement Age
If you claim Social Security before your full retirement age and continue working, the earnings test may temporarily reduce your benefit. In 2026, Social Security withholds $1 for every $2 you earn above $22,320 per year if you are under full retirement age for the entire year.
The withheld benefits are not lost permanently — they are added back to your benefit when you reach full retirement age. But the cash flow impact during the early retirement years can be significant and needs to be planned for.
Strategies to Protect Your Benefit When Retiring Early
- Work part-time to fill the 35-year record: Even modest part-time income in your early retirement years can replace zero-earning years in your benefit calculation, potentially adding meaningful monthly income.
- Delay claiming even after stopping work: You do not have to claim Social Security when you stop working. Retiring at 58 and delaying Social Security to 67 or 70 can significantly increase your monthly benefit.
- Bridge with portfolio income: Using IRA or investment withdrawals to cover living expenses between early retirement and Social Security claiming age is a common and effective strategy for Southeast Texas retirees.
The Medicare Gap: The Other Early Retirement Challenge
Medicare eligibility begins at age 65. If you retire before 65, you need to bridge the healthcare coverage gap — either through COBRA continuation coverage, a spouse's employer plan, ACA marketplace coverage, or other options. Healthcare costs during this gap period are one of the most significant financial risks of early retirement in Texas.
The Bottom Line
Early retirement is achievable — but it requires careful planning around Social Security, healthcare, and income sources. Richard Placette II at MRB Capital Group helps Southeast Texas workers who want to retire early build a comprehensive plan that protects their Social Security benefit and covers the gap years without depleting their savings.