It is not really an option except for the extremely wealthy under the current system. Social Security, the tax code, and many private pension systems REALLY hammer you for retiring early. For instance,
Date of birth: 6/15/1950
Current earnings: $40,000.00
Benefit in year-2010 dollars
Retirement age Monthly benefit amount 1
62 and 1 month in 2012 $899.00
66 in 2016 $1,251.00
70 in 2020 $1,724.00
(from one of the social security benefit estimator web sites using their default values)
You will get hit with a 10% tax penalty (possibly more) from distributions from private and pension savings.
My parents are not extremely wealthy and they retired early just fine. I had one client that retired at 50 with $400k in the bank (which is not even close to extremely wealthy), and wasn't planning on drawing on his pension or SS until 65. It's all about lifestyle and how you've made your economic decisions in the past.
As for your 10%, that is not entirely correct. If you do retire prior to 59 1/2 and need to take funds out of qualified accounts (such as IRA's, 401k's, etc.), there are several ways to avoid the 10% early withdrawl penatly:
1) Hardship, medical, or other qualified expenses
2) 72t distributions (essentially they take the amount in your account, apply an IRS approved return rate, usually in the 6% range, and then come up with an amount that should, if that rate is realized, annuitize the distribution over the rest of your expected life).
There are a few other ways as well they get a bit more complex in the way they are set up as well.
As a side note, IMO the sweet spot for SS benefits is 66. If you look at the NPV of funds over expected life, it is the highest.
But this really gets back to the issue at hand, and that is that retirement, and especially early retirement, is really not a right, it's a privelege. SS was never ment to be a retirement system, it was meant to keep the elderly that could no longer work out of poverty, nothing more.