Retiring Between 62 and 67? Retirement Experts Warn of 11 Common Blind Spots

According to the Employee Benefit Research Institute's 2026 Retirement Confidence Survey, 46% of 2025 retirees stopped working earlier than planned, and 76% of those exits were due to factors like health issues or job loss.

For many, the 62–67 window isn't a choice. That makes the blind spots in this period especially risky. Key decisions made here could permanently shape your retirement plan.

Here's what experts say retirees often get wrong.

Editor's note: All figures referenced are based on current Social Security Administration (SSA) and Medicare guidelines and may change.

Claiming Social Security at 62 without running the numbers

Claiming at 62 permanently reduces your benefit by up to 30% compared to your full retirement age benefit. If you're entitled to $2,000 per month at FRA, that's $600 less every month for life. Over a 20-year retirement, it's $144,000+ in forgone income.

Before claiming early, model your break-even point. If you're in reasonable health, waiting two or three years delivers a meaningfully higher lifetime benefit.

Misunderstanding the Social Security earnings test

If you claim Social Security before full retirement age and keep working, the earnings test applies. In 2026, the SSA withholds $1 for every $2 you earn above $24,480. In the year you reach FRA, the threshold rises to $65,160, with a $1-for-every-$3 reduction.

While those benefits aren't lost, the short-term cash flow hit might catch you off guard, affecting your quality of life during retirement.

Overlooking the Medicare gap

Fidelity estimates $172,500 in lifetime health care costs, starting when you retire at 65 and are enrolled in Medicare. 

If you leave work at 62, 63, or 64, you face a coverage gap of up to three years. COBRA may cover 18 months, but costs $400 to $700 per month or more per individual. After that, ACA plans, or a spouse's coverage, become your main options, and costs can remain high.

Ignoring the IRMAA two-year lookbacks

Medicare IRMAA surcharges are based on your income from two years prior. A final high-income working year, a large IRA withdrawal, or a Roth conversion could raise premiums later.

In 2026, IRMAA starts at $109,000 MAGI for single filers and $218,000 for married couples. The surcharge can reach $8,279 per person annually at the highest tier. Many retirees miss this timing gap and are surprised by higher Medicare costs.

Underestimating sequence-of-returns risk

Sequence-of-returns risk occurs when markets fall early in retirement while you are withdrawing funds. A 20% decline in year two can do far more damage than the same drop in year fifteen.

Research shows that 70% of retirement plan failures are linked to negative returns in the first five years of retirement. Holding 12 to 18 months of expenses in cash or short-term bonds may protect your portfolio during downturns.

Assuming a 20-year retirement horizon

Retiring at 62 means your portfolio needs to last 25 to 30+ years. Many retirees underestimate this, given that a 65-year-old woman or man has a life expectancy of 86 and 84, respectively.

A longer retirement increases the risk of outliving your savings, especially if withdrawals are too aggressive in the early years or if unexpected expenses arise. Plan for 30 years as a baseline, then stress-test from there.

Overlooking spousal and survivor benefit strategies

Social Security spousal and survivor benefits are among the most underused tools for married retirees. A spouse could receive up to 50% of the other spouse's FRA benefit, while a surviving spouse may receive up to 100%, including delayed credits up to age 70.

The higher earner's claiming decision sets the survivor's benefit. For couples with a significant earnings gap, coordinated timing can add tens of thousands in lifetime income.

Defaulting to a fixed withdrawal rate

The 4% withdrawal rule is a useful starting point, not a guaranteed safe rate for all market conditions. At 62, with a 30-year horizon, some experts suggest a safer 3.5% withdrawal to reduce depletion risk.

More importantly, adjust your withdrawals over time. Strong market years may allow more spending, while downturns call for restraint. A rigid approach ignores how markets and expenses actually change.

Letting investment accounts sit unoptimized

Many retirees aged 62 to 67 keep the same equity-heavy allocation they used while working, even as withdrawals begin. This can increase sequence-of-returns risk because they may be forced to sell during downturns without a clear income plan.

A common approach is a bucket strategy, with one to two years of expenses in cash, intermediate bonds or dividends for years three to 10, and equities for long-term growth. This helps avoid forced sales at bad times.

Skipping Roth conversions in the gap years

The years between retirement and the start of Social Security and RMDs, often called the gap years, are usually your lowest-income period. That makes them a prime window for Roth conversions, when you can move money at 10% or 12% tax rates.

Skipping this opportunity leaves larger traditional balances growing, which can later trigger bigger RMDs that stack with Social Security and push you into higher tax brackets.

Not having a written retirement income plan

An IRALOGIX research found that 49% of retirees have no formal withdrawal strategy, drawing money when they need it, with no plan for sequencing, taxes, or adjustment. Without a retirement income plan, decisions become reactive rather than structured.

A simple plan should outline income sources like Social Security, pensions, and withdrawals, along with annual expenses and tax goals. This helps turn uncertainty into a clear, manageable strategy.

Bottom line

Retiring between 62 and 67 comes with several often-overlooked risks, including reduced Social Security benefits, Medicare coverage gaps, tax surprises, withdrawal mistakes, and underestimating how long your savings need to last. These blind spots can quietly reduce retirement income if not properly planned for.

To strengthen your position and avoid money mistakes, you could make extra cash online through freelancing or consulting, which can help supplement income and reduce pressure on withdrawals.

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