However, you only become available for full Social Security benefits, and you won’t be eligible for Medicare for a few years. This does not mean that retiring one year after the average age is a bad idea. In fact, it could work in your favor, provided you prepare for early retirement.
Let’s find out how to retire at 62.
Can I retire at 62?
Even though you’re not eligible for full retirement benefits from Social Security or Medicare, you can retire at 62 if you have enough money to support yourself.
It’s essential that you make sure 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.
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. According to the Bureau of Labor Statistics, those expenses in 2021 were:
Only some of these expenses may apply to you when you enter retirement at 62, so be sure to envision the retirement you hope to have and base your calculations on that.
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 if you retired a few years ago.
Obviously, your annual retirement income should cover your annual 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.
What are the average retirement savings at 62?
The average retirement savings at 62 are not a goal amount to reach by this age. Instead, this figure is only useful for seeing how your personal savings compare with the national average.
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 would be challenging.
Saving for retirement at 62: How do I do it?
Saving effectively should be part and parcel of every early retirement plan.
Find out how to save for retirement at 62 below:
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.
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.
