Can I Cash Out My Social Security in My 20s Early? Pros and Cons
Social Security taxes are deducted from workers’ paychecks to fund retirement, disability, and survivor benefits.
Workers generally cannot withdraw these contributions as a lump sum.
Retirement benefits typically begin at age 62 for eligible workers, with the amount based on their earnings history and claiming age.
Cash-Out Options Checker: A Guide for Your 20s
Pros: Potential Benefits
- Immediate financial relief: Extra cash for emergencies, bills, or debt, if available from other sources.
- Greater flexibility: More accessible savings for short-term needs.
- Investment opportunities: Personal savings can be invested for potential growth, with some risk.
Cons: What You Could Miss Out On
- Retirement income: Monthly Social Security benefits generally start at age 62 at the earliest.
- Disability protection: Benefits may be available if you qualify due to a disability.
- Survivor benefits: Eligible family members may receive benefits based on your work record.
- Long-term security: Personal savings and investments do not automatically provide the same protections.
Can You Cash Out Social Security in Your 20s?
No, Social Security doesn’t let you withdraw your payroll tax contributions as a lump sum simply because you want to stop working.
Retirement benefits generally become available at age 62, provided you have enough qualifying work credits.
You may qualify for disability or survivor benefits earlier if you meet the relevant requirements, but these are monthly insurance benefits, not refunds of your contributions.
| Work history | Effect on retirement benefits |
|---|---|
| 10 years of work, then stop | 25 years count as zero earnings in the 35-year calculation. |
| 20 years of work, then stop | 15 years count as zero earnings. |
| 35 years of work | No zero-earning years if you earned income in all 35 years. |
| 40 years of work | Your 35 highest-earning years are generally used. |
What happens to your work credits?
You keep the Social Security credits you’ve already earned, even if you leave your job. Most workers need 40 credits to qualify for retirement benefits.
If you stop working with fewer than 40 credits and never return to covered work, you generally won’t qualify for retirement benefits on your own earnings record.
If you already have 40 credits, you can remain eligible for retirement benefits later.
How Much of Your Social Security Is Taxable
Can You Get Your Social Security Tax Contributions Back?
No, Social Security taxes withheld from your wages fund the Social Security system. They aren’t held in a personal account that you can cash out when you leave your job.
There are limited exceptions when you paid more Social Security tax than you actually owed.
| Your Situation | Can You Get Money Back? | What to Do |
|---|---|---|
| You retire | Usually no | Apply for retirement benefits |
| You leave the U.S. | Usually no | Check whether you qualify for benefits abroad |
| You don’t qualify for benefits | Usually no | Check your work credits and eligibility |
| You paid too much tax | Often yes | Claim the excess on your tax return, if eligible |
| Tax was deducted by mistake | Possibly | Ask your employer for a refund |
| Your visa qualifies for an exemption | Possibly | Check IRS rules and required forms |
When Can You Get a Social Security Tax Refund?
If you qualify for a credit because multiple employers withheld too much Social Security tax, you can generally claim it on your federal income tax return.
- Multiple employers: If you worked for two or more employers and their combined withholding exceeded the annual Social Security tax limit, you may be able to claim the excess on your federal tax return.
- Employer withholding error: If an employer withheld too much Social Security tax, ask the employer to correct the mistake.
- Ordinary payroll taxes: If the correct amount was withheld, you generally cannot recover it simply because you stopped working or no longer expect to qualify for benefits.
These claims follow tax-related deadlines and procedures. So, they aren’t part of Social Security’s retirement benefit application process.
What Happens to Social Security If You Stop Working?
Leaving your job in your 20s doesn’t erase your work history.
1. Your Work Credits Remain on Your Record
Credits you’ve already earned stay on your Social Security record. If you have 40 credits, you generally retain eligibility for retirement benefits based on your own work history.
If you have fewer than 40 credits, you may be able to earn the remaining credits by returning to covered work later.
2. Years without Earnings can Lower your Benefit
Social Security uses up to 35 years of indexed earnings to calculate your retirement benefit.
If you work for only 10 years, the calculation generally includes 25 years with zero earnings.
Example: How Your Work History Affects Benefits
For example, Jane works from age 22 to 32 and then stops. If she has enough Social Security credits, she can still qualify for retirement benefits later. However, her monthly payment will likely be lower than if she had continued working for more years.
4. Cost-of-living Adjustments Can Still Apply
Once you begin receiving Social Security benefits, your payments may increase through annual cost-of-living adjustments (COLAs).
But COLAs don’t replace the earnings you missed by leaving work early.
How to Apply for Early Benefits
Step 1: Check your eligibility and estimated payment
Visit the official Social Security retirement website.
- You can generally qualify for retirement benefits starting at age 62 if you have enough Social Security work credits, typically earned through about 10 years of covered work.
- Review your earnings history and estimated monthly benefits.
- Compare the amount available at age 62 with the amount available at your full retirement age.
Step 2: Create or sign in to your account
Go to my Social Security.
- Sign in using your existing account.
- If you do not have one, follow the instructions to create an account and verify your identity through an approved sign-in provider.
- If you cannot create an account, you can still pursue an application through Social Security.
Keep your login credentials private.
Step 3: Start your retirement application
Open the official application page.
- Choose the option for retirement benefits.
- Select Start a New Application.
- Read and accept the application terms.
- Answer questions about your identity, family, work history, and eligibility.
You can usually save your progress and return later if you cannot finish in one sitting.
Step 4: Gather the information and documents you may need
Prepare the following where applicable:
- Social Security number and date and place of birth.
- Birth certificate or other proof of birth, if requested.
- Proof of U.S. citizenship or lawful immigration status, if applicable.
- Bank routing and account numbers for direct deposit.
- Names, birth dates, and relevant marriage or divorce dates for current or former spouses.
- Recent W-2 forms or self-employment tax returns, if requested.
- Military service records for qualifying service before 1968, if applicable.
Important: Do not delay filing just because you are missing a document. Social Security may allow you to submit it later or help obtain the information.
Step 5: Select the month you want benefits to begin
You can generally apply up to four months before the month you want your retirement benefits to start.
- Select your intended starting month carefully.
- Check the estimated monthly payment before submitting.
- If you continue working before full retirement age, earnings may temporarily reduce the amount Social Security pays you.
- Remember that early claiming generally results in a permanently lower monthly retirement benefit.
Benefits are normally paid the month after the month for which they are due. For example, benefits for May are generally paid in June.
Step 6: Review and submit your application
Before submitting:
- Verify your name, Social Security number, and other personal information.
- Check your earnings and employment details.
- Confirm the month you want benefits to begin.
- Review your banking details.
- Submit the application and save the confirmation or receipt.
Read any instructions Social Security provides about additional documents or follow-up requirements.
Step 7: Track your application and receive payments
Sign in to my Social Security to check your application status.
- Respond promptly if Social Security requests more information.
- Review your approval notice and monthly benefit amount.
- Check your payment schedule and direct deposit details.
- Keep the approval notice for your records.
Alternatives to Cashing Out Social Security Early
If you need money in your 20s, you need to consider other sources before taking on expensive debt.
- Emergency savings: Use accessible savings to cover unexpected expenses without reducing retirement funds.
- 401(k) or 403(b): Depending on your plan, you may qualify for a loan or hardship withdrawal. Withdrawals may trigger income taxes and an additional early-distribution tax unless an exception applies.
- Traditional or Roth IRA: Traditional IRA withdrawals may be taxable and subject to an additional tax. Roth IRA contributions can generally be withdrawn tax- and penalty-free, but different rules apply to earnings and conversions.
- Unemployment benefits: If you lost your job, check whether you qualify under your state’s unemployment program.
- SSDI or SSI: If you have a qualifying disability, Social Security Disability Insurance (SSDI) or needs-based Supplemental Security Income (SSI) may provide financial support.
- Personal loans or credit: These can provide quick access to money but may involve high interest and repayment obligations.
- Employer or community assistance: Check for severance, disability benefits, emergency grants, housing assistance, or other support programs.
Each option has different costs and eligibility requirements. Review the rules before withdrawing retirement funds or taking on debt.
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