Older tech workers are retiring at 55 — but claiming Social Security at 62 locks in smaller checks for life. Can you afford it?

Amazon has chopped a minimum of 30,000 positions since October 2025. Meta announced 8,000 layoffs, or about 10% of its workforce, in April, and Microsoft offered early retirement or voluntary buyouts to thousands of employees that same month.

Steve Otteson was one of those offered a buyout from Microsoft. The 55-year-old former software engineer told the Seattle Times that he hadn’t been planning to retire early, but he was offered a package that included nine months of pay.

Tech workers often receive high compensation and, in some cases, stock options. With that in mind, they may be in a better position to retire than workers in other industries.

But they often have more expenses, too. The cost of living in San Jose, California, which is in the Silicon Valley tech corridor, is 84% higher than the national average. The cost of living in Redmond, Washington, where the Microsoft campus is located, is 43% higher than the national average.

While Otteson admits the timing of the buyout was “fortunate,” he and his wife are planning to move out of Redmond so they can afford an unplanned early retirement.

“We feel like we’re getting priced out,” he told the Seattle Times. “Our money just doesn’t go as far as we used to.”

AI, ageism and burnout

The tech industry is going through a major transition, with Big Tech laying off thousands of employees while simultaneously pouring more money into the development of artificial intelligence. Some workers are training the AI that could eventually replace them.

“You can have ‘layoff fatigue,’ even if you’re not laid off, simply waiting for the axe to fall,” writes Bryan Robinson, Ph.D., a Professor Emeritus at the University of North Carolina, for Forbes. “Wondering if you’re next can cause layoff exhaustion. Taking on the workload of a laid-off coworker can put you at risk for anxiety and burnout.”

Older workers who’ve been laid off could struggle to find a new job. Not only are there fewer tech jobs amid industry-wide layoffs, but they may also face ageism in an industry that has often favored younger employees.

This isn’t just an issue in the tech industry. About four in 10 retirees say they left the workforce earlier than planned, according to a 2025 survey by the Employee Benefit Research Institute and Greenwald Research. And seven in 10 say the reason was something out of their control, such as changes at their workplace.

If you retire at 55 and take Social Security at 62, you lock in smaller checks for life. And without an employer-based health plan, you’ll need to cover the gap until Medicare kicks in at age 65.

Can you afford to retire early?

Deciding whether you can afford to retire early starts with creating a retirement budget (if you don’t already have one).

If you’re retiring before age 62, Fidelity recommends saving 33 times your expenses, assuming an annual withdrawal rate of 3%. That’s lower than the oft-suggested withdrawal rate of 4% or 5%, but a smaller withdrawal rate will stretch out your savings over a longer retirement.

The earliest you can claim your Social Security retirement benefit is 62, but you’ll get a permanently reduced benefit by up to 30%. If you wait until your full retirement age, or FRA (between 66 and 67), you’ll receive 100% of your benefit. And if you wait until after your FRA, your monthly benefit increases by 8% each year up to age 70.

Even if you retire early, you may want to delay your Social Security benefit until your FRA and bridge the gap with other savings. Most retirement accounts will penalize withdrawals before age 59 1/2. You may be able to withdraw from your 401(k) when you turn 55, thanks to the Rule of 55, but that could reduce your overall nest egg down the road.