Can I retire at 62? How you can plan for an early retirement
Learn what you need to consider before deciding to retire at 62. You can also speak to a financial advisor who can help you navigate retirement and meet your goals.
Summary
While the average retirement age is 61, some Americans choose to retire at 62.
You will not be eligible for full Social Security and Medicare benefits if you choose to retire at 62.
According to U.S. Census data, a retiree’s annual expenses add up to just over $50,000.
A financial advisor can help you plan your dream retirement and create a financial plan to get you there.
How much money do I need to retire at 62?
Many financial advisors recommend taking a look at the average annual expenses of Americans aged 65 and older to get an idea of what your annual retirement income should cover. This will give you a good starting point.
According to the Bureau of Labor Statistics, those expenses in 2021 were $52,141 annually or $4,345 per month. They are broken down as follows:
| Expense | Average Amount Spent In 2021 |
|---|---|
| Expense | Average Amount Spent In 2021 |
| Housing | $18,872 |
| Utilities, fuel, public services | $3,921 |
| Health care | $7,030 |
| Transportation | $7,160 |
| Food at home | $4,497 |
| Dining out | $1,994 |
| Personal insurance and pensions | $2,850 |
| Entertainment | $2,889 |
| Clothing and services | $986 |
| Reading materials | $138 |
While these figures give you a good starting point, it’s key that you do your own calculations based on your lifestyle.
For now, let’s assume that you will be faced with similar expenses in your golden years. As you can see, you would need slightly more than $50,000 annually to cover just these expenses.
Obviously, your annual retirement income should cover your yearly expenses for the duration of your retirement, which, if we work on an average life expectancy of approximately 80 years, is 18 years.
If you want a $50,300 annual retirement income, the calculation is $50,300 x 18 = $905,400.
This means that you would need to save less than $1 million if you want to retire at 62.
How do you retire at 62?
Saving effectively should be part and parcel of every early retirement plan.
Here are some tips on how you can save for an early retirement:
Think carefully about when to claim Social Security: Although you can start claiming Social Security at age 62, this might not be in your best interest, as you won’t be eligible for full benefits. You can receive 100% of your monthly benefits if you wait until you turn 67, but if you delay claiming benefits until you turn 70, you will be eligible to receive 124% of your monthly benefits.
Choose the best savings and investment products: Some Americans who dream of retiring at 62 limit their preparations to their IRA or 401(k). However, this approach isn’t necessarily the best. Ask a financial advisor about savings and investment products that you can use to bolster your preparations.
Ensure you have a sustainable retirement income: Inflation can derail early retirement plans. Set aside some money to help prevent it from making too much of a dent in your lifestyle or preventing you from doing all those things you planned on doing when you retired. Remember, income, expenditure, and inflation aren’t limited to housing, food, and transportation; they also include other things such as health care. Ask your financial advisor for a plan that quantifies inflation’s impact in two or three decades.
Spend less and boost your income now: Thoroughly review your monthly expenses and identify those you can reduce or eliminate. After looking for ways to save money, see if you can find ways to boost your income now, such as a side hustle, a part-time second job, or more hours at work. Use your extra earnings to save to retire at 62.
Can I retire at 62?
Yes, you can retire at 62.
There is no law-mandated retirement age, meaning you can retire whenever you choose.
Despite this, you will need to decide carefully if this is the right option for you.
Should I retire at 62?
Whether or not you should retire at 62 is a personal decision. However, there are things you have to keep in mind when making a decision.
If you retire at 62, you will not be eligible for full Social Security benefits or Medicare.
If you have enough money to support yourself at 62, this might not be an issue.
In fact, according to a recent Gallup poll, if you choose to retire at 62, you’ll be a year behind the average, which currently stands at 61, up from in 1991.
It’s essential to ensure that you can cover the expenses involved in the lifestyle you want to live. However, the amount of money you can save might require you to adjust your expectations to fit reality.
If you don’t prepare properly, you will find it difficult to retire a year after you reach the average retirement age.
If I retire at 62, will I receive full benefits at 67?
As mentioned, you do not receive full retirement benefits, such as Social Security or Medicare, if you start taking them at 62.
Starting your benefits early means they will be reduced.
However, if you retire at 62 and decide not to start taking your benefits until 67, you will receive the full amount.
What are the average retirement savings at 62?
According to the 2022 Survey of Consumer Finances published by the Federal Reserve, the average retirement savings for Americans aged 55-64 are $537,560.
If your savings are in line with the national average, retirement at this age might be challenging.
In fact, the average amount Americans say they need to retire is growing, with the average now standing at $1.46 million, a 53% jump from four years ago.
How much money does a married couple need to retire at 62?
A common rule of thumb when planning for retirement is to have between 70% and 90% of your pre-retirement income if you want to continue your standard of living.
This applies to couples also.
For example, if your joint income pre-retirement is $220,000, you will need between $154,000 and $198,000.
It’s also important to note that you will also have two Social Security checks coming in, provided you both have worked for at least 10 years and earned at least 40 work credits.
All the advice given to a single person – be cautious, plan ahead, wait to claim Social Security – also applies to married couples.
Want expert financial advice?
If the average retirement savings at 62 are any indication, early retirement is going to be difficult for many Americans.
However, with a clear plan, the right savings products, and the hard work and discipline you need to save money, you can leave full-time work before you become eligible for full Social Security benefits.
Learn more about retirement and how to retire at 62 from a regulated financial advisor. Let Unbiased match you with the advisor who is most suitable to offer you expert financial advice for your needs.
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Senior Content Writer
Rachel is a Senior Content Writer at Unbiased. She has nearly a decade of experience writing and producing content across a range of different sectors.