7 Things To Know if You’re Planning To Retire at 62

If you want to leave the workforce at age 62, that’s an exciting prospect. But before you make the leap, it’s critical to get clear on the details.

When will you begin taking Social Security? Will you need to supplement your monthly income? How will you handle health insurance before Medicare kicks in?

Let’s explore what you need to know before exiting the workforce before your full retirement age.

You cannot sign up for Medicare until you turn 65. But for most workers, leaving their jobs means saying goodbye to their employer’s group health insurance. If you want to retire at 62, you’ll need to cover your health care costs without any help for a few years.

In some cases, you might be able to keep your workplace group health insurance through COBRA. But you’ll have to pay the full monthly premium for this temporary coverage. 

Depending on what your employer covered before, this could be a significant increase in your health insurance costs.

Another option is to purchase a plan through the Affordable Care Act marketplace. Medicaid could be an option for retirees with very low incomes.

If you are planning to tap your Social Security at age 62, you’ll get the lowest monthly benefits possible. Depending on your situation, you could see your expected Social Security benefit cut by as much as 30% if you claim it at 62 instead of your full retirement age.

For retirees who can wait, consider waiting to claim Social Security benefits until at least your full retirement age. This means you’ll have more monthly income for the remainder of your retirement, but you’ll have to live without those payments until then. 

If you can’t wait until full retirement age, be prepared to get a smaller monthly check from Social Security due to your early retirement.

When you dream of leaving work in the rearview mirror, try to think about what you plan to do with your newfound time. If you are cutting your working hours from 40 to 0, you’ll have a lot of time on your hands.

If possible, map out some ways you plan to use that time. Otherwise, it’s possible you’ll find yourself bored in early retirement.

Some potential ways to spend your time include volunteering, hanging out with friends, visiting family, traveling the world, getting into better shape, or picking up a new hobby you’ve always wanted to try.

Whether you are retired or not, you’ve likely noticed that life has gotten more expensive lately. While inflation has decreased significantly over the past couple of years, it is still putting pressure on budgets. If you are leaving your paycheck behind, it’s possible you’ll feel the pinch.

Take a realistic look at your retirement spending plans. Consider if you can afford to keep pace with those expenses on your retirement income. 

If not, it's worth looking for ways to limit those future expenses. If you can’t find a way to lower expenses, then you might need to stay at your job for a bit longer.

If you are ready to leave your day job behind, it doesn’t necessarily mean you need to give up paid work altogether. Consider looking for a way to earn money on a part-time basis.

In the best-case scenario, you’ll get paid to do something you love on your own terms. Or you might try your hand at a completely new field. The pay might be lower, but flexible hours doing something that interests you is always a good option.

Even if you can’t find work doing something you absolutely love, becoming a consultant in your field could prove lucrative.

Housing constitutes a major expense for most Americans, including retirees. If your current home has more space than you need, downsizing can make your retirement significantly more affordable.

When you move to a smaller space, your expenses will probably decrease as well. For example, moving from a sprawling house on a big lot to a two-bedroom single-story house could make your life easier as you age. 

Not only will this potentially cut your housing costs, but it can also eliminate some of the maintenance you previously had to handle, like mowing a large lawn or replacing a complex roof.

The lower cost can make it easier to afford the rest of your retirement lifestyle.

An early retirement might be a dream come true, but if your finances aren’t fully prepared to make the leap, you might face some lean times in your retirement years. The good news is that a flexible attitude can help you navigate the situation with grace.

For example, you might decide to pick up a side hustle you enjoy or cut back on lifestyle spending to maintain the retirement you had in mind. Whatever unexpected challenges you face in retirement, a little bit of flexibility can go a long way.

Retiring a few years ahead of schedule can help you realize your dream of a work-free life early.

While it’s exciting to leave the working world, it’s important to consider all of the potential issues, including your retirement readiness, before making the move.