Here are the current Discounts/Penalties for retiring early. The penalties are harsh and permanent once you accept them and retire.
This chart shows the penalty Minnesota imposes for retiring before the age of 66 regardless of years of service.
Each year you work in Minnesota you receive a year of service credit which is 1.9% of your average salary (5 highest consecutive years).
For example, someone retiring at the age of 55 with 30 years of work/service on paper qualifies for 30 x 1.9% = 57% of their average salary. However, Minnesota imposes a penalty/discount since that person is not age 66.
In that case Minnesota says the penalty is 65% on the benefit: 100%(full benefit 57%) – 65%(penalty) = 35%(portion of your pension you are eligible to receive)
57% x 35% = 20%, so a person retiring at 30 years of work and age 55 receives 20% of their average salary.
Example, a person’s average salary (high 5) is $70,000. They have worked for 30 years. With the penalties listed above, and the retirement age to the left, their lifetime benefit would be:
**Note this uses the 62/30 exception – a person without 30 years has harsher penalties up to 66**
55: 35% of 57%: $13,965 (19.95%) Not eligible for cost of living raises until age 67.
56: 39% of 57%: $15,561 (22.23%) Not eligible for cost of living raises until age 67.
57: 43% of 57%: $17,151 (24.51%) Not eligible for cost of living raises until age 67.
58: 47% of 57%: $18,753 (26.79%) Not eligible for cost of living raises until age 67.
59: 51% of 57%: $20,349 (29.07%) Not eligible for cost of living raises until age 67.
60: 58% of 57% $23,142 (33.06%) Not eligible for cost of living raises until age 67.
61: 65% of 57%: $25,935 (37.05%) Not eligible for cost of living raises until age 67.
62: 84% of 57%: $33,516 (47.88%)
63: 88% of 57%: $35,112 (50.16%)
64: 92% of 57%: $36,708 (52.44%)
65: 96% of 57%: $38,304 (54.72%)
66: 100% of 57%: $39,900 (57%)