Americans are infamous for their overall unwillingness or inability to save money. The numbers are, frankly, scary. Most people save next to nothing. In fact, a recent study showed on average that people were actually spending more than they were taking in earlier this year. This effectively means that the average American is saving nothing.

As the population ages, the finances make no sense. Social security is the sole government plan designed to ease the financial burden on seniors. Distributions, however, are relatively nominal. The continued existence of the plan is also in doubt for the long-term. At a minimum, it is expected that benefits will be reduced. In short, the aging population has little to count on other than their personal savings. Most of these savings come in the form of home equity or participation in retirement plans.

Unless you have found that perfect job, the idea of retiring early is probably pretty attractive to you. In fact, more and more people are doing it these days. While there is nothing illegal about retiring early, you are going to need funds to live on. Many people access their home equity, but a sizeable percentage of people also take early withdrawals from their retirement account.

If you take an early distribution from your retirement plan, there are tax consequences. In general, you can expect to pay a 10 percent penalty. When combined with income tax on the distributions, this can really cut down on the actual amount of money you put in your pocket.

Whether we like it or not, we are headed for a financial crisis of sorts for older individuals. The demographics show a bulge in our population and that population is approaching retirement age. If you fall within this group, the aging baby boomers, you should be very careful about early retirement. If you outlast your money, there will be little to fall back on.