Things to Know Before You Retire at 62

Collecting Social Security, Medicare, and More

Get a plan in place and you can retire at 62.
Photo: Kevin Dodge/Blend Images/Getty Images

Are you hoping to retire at 62? If so, you're not alone. Age 63 is the average time of retirement in the U.S. But before you quit your job, there are some things you can do to make sure you're ready. Get your finances in order before you retire, to make sure you're in the best position to enjoy your freedom.

Can You Delay Social Security?

Many people say that they fear running out of money after they retire. Protect your future income by making a smart choice about when to begin taking Social Security. The program provides inflation-adjusted income for as long as you live, but all future increases are based on your starting benefit. If you wait until your full retirement age (FRA) or later, you stand to be paid more.

You might not need to start getting benefits as soon as you retire. If you choose to stop working at 62, that doesn't mean you'll have to start getting Social Security at 62. You will get a larger monthly payment by waiting until you are older before you collect.

You can also use strategies for married couples to get more out of your joint benefits. Working together to create a plan will help you get more money though time.

Married couples who choose wisely about how and when to collect benefits may jointly receive many thousands more than those who collect early. You can use a Social Security calculator to figure out your best options.

If you have enough saved, you may want to think about using your savings to cover expenses for a while after you retire. That will allow you to delay the start date of your Social Security. Doing so can lock in a higher income amount later, which will help protect you from outliving your money.

Consider Part-Time Work

If you're ready to retire, you may have been paring down your monthly expenses already. You might also think about boosting your earnings with a part-time job, which can help you put off taking your Social Security payments. If you were born in 1943 or later, you get an 8% increase for each year that you delay. You can also use your income to build up your 401(k) or IRA.

Medicare Doesn't Kick in Until 65

Medicare benefits don’t start until you turn 65. If you retire at 62, you’ll need to make sure you can afford health insurance until age 65 when your Medicare benefits begin. (If you have a disability, you can qualify early.)

With the Affordable Care Act, you are guaranteed to get coverage even if you have a pre-existing condition. You also can't be charged more than someone who is healthier. But health insurance pricing can vary by location. Many retirees whose employers paid for their insurance get caught off guard by how expensive it can be.

Also, keep in mind that Medicare does not cover all healthcare costs. Many people purchase additional health coverage to supplement their Medicare benefits. Get quotes on your health insurance costs. Build that expense into your retirement budget.

Diversify Your Portfolio

If you start to withdraw money from a tax-deferred retirement account, you might be surprised at how quickly the money seems to go. You will have to pay taxes on each and every withdrawal. Consider adding an account such as a Roth IRA, funded with after-tax dollars. That way, when you need money, you'll be able to reduce your current tax burden by taking out some money that you already paid taxes on when you invested it.

Consolidate Retirement Accounts

If you have money in IRAs, 401(k)s, or other employer-sponsored plans, think about consolidating those plans into one account.

Many people believe that their money is safer when they spread it out across many different firms, but when you use a large, well-known financial custodian, you can build a well-diversified portfolio by holding all of your investments within a single account.

The underlying assets belong to you. They are not assets of the financial firm. That means you gain very little added safety by having accounts spread out across many firms.

Another reason to combine your accounts is that tax rules require you to start taking distributions from your retirement accounts at a certain age. That is age 72, or 70 1/2 if you turned age 70 1/2 prior to January 1, 2020. You'll find it much easier to follow these rules when your accounts have been consolidated.

Although you are not required to take money out of your IRA until that age, it may make sense to start taking withdrawals if you need them. It depends on your marginal tax bracket and your other sources of income. To figure out whether that makes sense for you, you may wish to work with a retirement planner. Choose one who specializes in helping people decide on the most tax-efficient way to use their retirement money.

Frequently Asked Questions (FAQs)

What is the average Social Security benefit at age 62?

The Social Security Administration doesn't publish average data for each specific age; it lumps ages 18 through 64 together. However, it does state that someone who had made the maximum contribution throughout their career (that would require an income of at least $142,800 in 2021) to Social Security would be paid $2,324 per month in benefits it they were to retire at age 62 in 2021. If the same person were to retire at age 65, they would receive $2,841 per month.

How much do you need to retire at 62?

The amount you need in order to retire depends on many factors that are specific and personal to each individual. To determine it, you need to go over your lifestyle goals, look at your health, estimate how much you'll get from Social Security, and more. If you want to retire at age 62, come up with your target amount for retiring at the full retirement age of 67, determine how much you'd need per year, and then add that amount for each year you want to bump up your retirement.

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  1. Center for Retirement Research at Boston College. “Will the Average Retirement Age Continue to Increase?,” Page 3.

  2. Social Security Administration. “When to Start Your Benefits.”

  3. Social Security Administration. “Social Security Retirement Benefit Claiming-Age Combinations Available to Married Couples.”

  4. Social Security. “Delayed Retirement Credits.”

  5. Social Security Administration. “Medicare,” Page 1.

  6. “Can I Get Coverage if I Have a Pre-Existing Condition?

  7. “Choosing a Medigap Policy: A Guide to Health Insurance for People With Medicare.”

  8. IRS. “IRA FAQs - Distributions (Withdrawals).”Accessed Oct. 13, 2021.

  9. Social Security Administration. "Workers with Maximum-Taxable Earnings."

  10. Social Security Administration. "Contribution and Benefit Base."

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