Here's The Worst Retirement Age According to Financial Advisors

You can start taking Social Security benefits at age 62, so you might be wondering if 62 is the prime age for retirement. If so, you're not alone: a survey done by Mass Mutual in 2024 showed that 62 is the average American retirement age.

But if you want to avoid money mistakes in retirement, it's important to start off on the right foot, which could mean holding off on retiring until you're at least 65.

Below, we'll explain that while retiring at 62 feels liberating at first, it can set you up for a lifetime of compounding money problems that can spiral with age.

You'll lock in a lower Social Security benefit for life

If you wait until your full retirement age (FRA) to apply for Social Security, you're entitled to the full payment with no reductions. In contrast, for every month you take Social Security before your FRA, the more your benefit will be reduced.

Crucially, the reduction doesn't end once you reach your FTA. It will stay the same for the rest of your life, so you could end up with a lifelong benefits check that's up to 30% less than it would have been if you'd been able to wait.

You'll have to cover healthcare costs yourself

Medicare coverage doesn't kick in automatically right when you retire. Instead, you're enrolled when you're 65, regardless of whether or not you're still working (though in the latter case, you may have the option to waive Medicare if your employer pays for your healthcare).

Covering an insurance policy yourself without an employer to help might prove too much for your budget. If you do have to leave work before you qualify for Medicare, try to make sure you have enough savings to help you bridge the healthcare gap that will last from ages 62 to 65.

Your retirement accounts will start shrinking

Once you're retired, you'll replace your paycheck with withdrawals from your 401(k) and other retirement accounts. But retiring a few years earlier than you'd planned might deplete your fund too early, which could make the last years of your life extremely uncomfortable.

You'll lose the opportunity to keep contributing to your 401(k)

If you retire too early, you're not just starting to deplete your retirement fund sooner than anticipated. You're also losing out on working years where you could have continued to contribute to your 401(k). And if your former employer matched up to a certain percentage of your 401(k) contributions, your financial losses will be even higher.

You can't take advantage of catch-up contributions

You can start making increased catch-up contributions to your traditional IRAs once you turn 50. But for those between the ages of 60 and 63, your catch-up contribution limit increases from $8,000 to $11,250. If you retire at 62, you'll miss out on at least a year's worth of opportunities to rapidly grow your retirement fund.

You might not have the funds to cope with inflation

Thanks to the last few years of record-breaking inflation, your dollar doesn't stretch nearly as far as it used to. It would have been hard to budget for inflation back when you first started saving, which could mean the amount of money you've saved to this point may no longer accommodate your needs if high prices stay the same.

You can't predict how long you'll live

Are you considering retiring at 62 because you assume you won't be around for much longer after that? You could end up living longer than you thought you would, but if you retired at 62 without budgeting for another 20 years of life, it will be hard to maintain the same quality of life once your savings run out.

You might be lonelier than you think

If most of your social interactions happen at work, the transition into retirement could be a major shock. While you may think you want a quiet life at age 62, you might struggle to adjust to the isolation and find that you're not quite ready for a lifestyle change of this magnitude.

You'll have a harder time paying off debts before you retire

Waiting to retire means you'll have more time to pay off high-interest credit card debt, car loans, and mortgages without dipping into your savings. Any debt you bring with you into retirement still needs to be paid off, a task made harder when you don't have any income.

Plus, getting behind on credit card payments can grow your debt frighteningly fast, and it will be hard to play catch-up using your savings alone.

Bottom line

Of course, there's no single worst retirement age that applies across the board. Your personal circumstances, retirement goals, and earning ability will all impact where you stand financially once it's time to retire.

However, it's a good rule of thumb to stick with the workforce until at least your full retirement age. And if you do have to leave work early, mitigating measures like delaying Social Security as long as you can help keep your retirement fund in the black.

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