How much do you lose if you retire earlier?


How much is lost if you retire before reaching retirement age? Does the pension allowance undergo a significant reduction or can the possibility of an early exit from the world of work be serenely assessed? The worker who wants to leave the profession earlier than expected must know that the amount of the pension will be lower. This is because as the years of contributions that the worker pays proportionately decrease, the amount of the monthly allowance decreases.

In the article “At what age can you retire early?” you will find information relating to the registry requirement that is needed to access the social security treatment. Let’s now calculate how much you lose if you retire earlier. The taxpayer who stops working earlier receives the monthly allowance a few years in advance and no longer pays contributions to the social security institution. If on the one hand this represents an advantage, on the other the monthly installment suffers a loss.

How much do you lose if you retire earlier?

There are no penalties for the taxpayer who chooses early retirement. Simply put, your monthly wages will be lower because your contribution history is shorter. The increase in the contribution amount will be matched by a more substantial pension check. The amount of the monthly accrual could also decrease by 20/25% depending on the calculation system that is adopted.

Early retirement usually entails two and a half years less work. If the calculation of the pension is based on the contribution system, the overall amount of the contributions that the worker has paid is taken into consideration. In this case, the amount of contributions is multiplied by a transformation coefficient whose percentage changes in relation to age.

If, however, the remuneration system is used for the calculation of the pension allowance, it may happen that the worker does not lose anything. This is because the number of weeks the taxpayer has worked is taken into account. And the maximum number of weeks covered by the calculation corresponds to the number of weeks that the worker has accumulated by 2011. If instead the mixed system is used, the limit number of weeks to be considered reaches 31 December 1995. In the remuneration system it is up to the worker make a forecast of the wages he will receive and evaluate to what extent an early exit will decrease the check.

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