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?
If you retire at 62, you will not be eligible for full Social Security benefits or Medicare.
However, even though you’re not eligible for full retirement benefits, you can retire at 62 if you have enough money to support yourself.
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.
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 theBureau 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 |
|---|---|
| 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 |
Only some of these expenses may apply to you when you enter retirement at 62, so it’s key that you do your own calculations based on your lifestyle. For example, if you plan on eating out more in retirement, you will need to increase this amount.
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.
Obviously, yourannual 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.
What are the average retirement savings at 62?
According to the2022 Survey of Consumer Financespublished 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.
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 to 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 youplanned 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 expertfinancial advicefor your needs.
