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Retire at 62: 5 Simple Reasons Why You Shouldn't

Source: Social Security Administration.

This article was updated on April 14, 2015.

Ever since the Social Security laws were changed in 1972 to allow all workers to claim benefits before reaching full retirement age, retiring early has become a popular choice among Americans. Even as the official full retirement age for Social Security has climbed to age 66, many workers still have the goal of chopping a few years off their careers by choosing to retire at 62. In particular, the fact that Social Security is available to early retirees at that age is a powerful inducement to pick 62 as a retirement goal.

But before you decide that age 62 is the best time for you to retire, you need to understand a few things about life in retirement and the Social Security system. In particular, the following five aspects of early retirement could lead you to make a different decision about when you leave the workforce for good.

1. Your monthly Social Security check will be smaller
For most people, Social Security benefits first become available at age 62. But the amount you'll receive every month is reduced. Specifically, for those retiring now, payments will be 25% smaller than they would be if you waited until full retirement age of 66 -- and 43% smaller than they would be if you waited until the maximum-benefit age of 70.

Source: Social Security Administration.

The trade-off, of course, is that the reduction mostly accounts for the fact that someone who takes benefits at age 62 gets 48 extra monthly payments compared to waiting until age 66. Nevertheless, what might seem like ample income now could leave you regretting not holding out for larger monthly payments later.

2. Healthcare is a huge burden to take on
An even bigger challenge early retirees have to deal with is healthcare coverage. With Medicare not kicking in for most people until age 65, those who retire at age 62 have to deal with three full years of covering their own health insurance costs.

Federal law can help early retirees bridge part of the gap in coverage, with COBRA continuation health coverage usually available for up to 18 months after you quit your job. But even under COBRA, you're responsible for making insurance payments, and given that health insurance premiums are near their highest levels for those in their early 60s, that can be a bigger financial burden than most people realize.

3. Social Security will be smaller for your family
Electing to receive early Social Security benefits doesn't just affect your monthly payment. It can also reduce the amount that your surviving spouse receives after you pass away. Survivors' benefits are limited to the amount you would have received if you were still alive, so if you started collecting before full retirement age, your surviving spouse would have to accept reduced payments as well.

Source: Social Security Administration.

4. You may be giving up the best-earning years of your career
For some fortunate workers who decide for themselves when to retire, retiring at 62 can be a substantial financial sacrifice. If you've climbed the corporate ladder throughout your career, then you could well be at your peak earnings in your early 60s, and early retirement can cost you both directly through the loss of that income and indirectly through the impact on Social Security or pension benefits.

Obviously, many early retirees aren't in this position, especially as employers cut staff and encourage early retirement packages precisely to cut these costs. But if you are, make sure you're financially ready before you pull the trigger and give up a golden opportunity.

5. 62 might be too late for you to retire
If you've gotten through all four of the reasons above and have addressed all those concerns, then another question you should consider is whether you might actually be able to retire before age 62. Even without Social Security, a solid retirement savings plan can help you retire in your 50s or even 40s if you have the earnings potential and investing track record to back it up. In that case, waiting until 62 could leave you missing out on extra years of a happy retirement.

Retiring at 62 isn't always a bad move. But before you do it, make sure you understand all the consequences. Knowing what's at stake could lead you to what turns out to be a better decision for you and your family.

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Read/Post Comments (12) | Recommend This Article (60)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 24, 2014, at 9:36 AM, glocker62p wrote:

    One simply reason why you should retire at 62: you planned ahead, you followed that plan and retirement at 62 will comfortable.

    The age at which you retire is irrelevant. If you planned and made the right moves financially, you'll be ready when you reach your target age whatever that age may be.

    To make a blanket statement on what's the best age to retire is not only misleading and arrogant, but also completely ignorant of an individual's personal financial circumstances.

    Blanket statements are generalizations and a generalizations are fallacies.

  • Report this Comment On August 24, 2014, at 11:10 AM, Jim8 wrote:

    I have to agree that health care is now a limiting factor, because everything the "Affordable" Care Act offers us is too expensive and covers so little that it isn't worth purchasing for someone in their 60's.

    I had a great retiree plan from my employer which covered me 100% no matter what happened, but now I'm one of the newly uninsured.

    My retirement savings is now at risk, but the odds are with me, and I have almost $12,000 I didn't flush for insurance that only would have made me pay MORE for services that I'd pay in cash.

  • Report this Comment On August 24, 2014, at 11:14 AM, Jim8 wrote:

    I saw set to disagree with this article because work = stress, and stress is a killer.

    Then I read the part about health care being a factor. It wasn't last year for a lot of us, but it now is, thanks to a really bad idea, the "Affordable" Care Act.

    If you are poor it's probably great, but if you worked your life looking forward to retiring, it now makes that an impossibility for a lot of people.

    My employer did as a lot probably did, dropped our retiree medical because we can now buy it on the exchanges. Only problem there is that everything available on the exchanges isn't worth buying if you are paying for it and do the numbers.

  • Report this Comment On August 24, 2014, at 11:42 AM, segarolow4 wrote:

    Retire as soon as you can....

    Down size big time.

    Get the hell out of Dodge...

    And have a great time..

    Don't work until you die on the job.

  • Report this Comment On August 24, 2014, at 12:48 PM, Doyouseeme wrote:

    Retire now, whether you are getting less or not. For many there is no other course. Most of what was said is just a lot of hooey. SS is getting over on people who have worked most of their lives and yet being cheated out of their money because the corrupt government has increased the retirement age. It isn't fair.

    No matter what age you retire at, all should get the maximum they deserve.

  • Report this Comment On August 24, 2014, at 3:05 PM, RatchetOriginal wrote:

    I retired at 53 and my wife at 55. We have had no regrets!!!

  • Report this Comment On August 24, 2014, at 4:37 PM, Diamondick wrote:

    Retired @ 56! Lovin' every minute of it.

  • Report this Comment On October 13, 2014, at 9:01 PM, zephyr33540 wrote:

    * retired @ 60 with Fed Pension

    *@62 got SSA for non fed jobs

    * Have fed Health care - AWESOME!

    *stress is a killer- best to get out if you are stressed and eligible! ANY JOB!

    *downsizing at MY speed!

    * working on getting hubby retired faster than i was!

  • Report this Comment On October 28, 2014, at 3:11 PM, sallybardsley wrote:

    In addition, pre-full retirement earnings are limited, and earning more than the allowed dollars results in SS earnings being decreased. One can earn whatever after full SS age is reached without affecting SS earnings, but not before.

  • Report this Comment On December 07, 2014, at 12:51 PM, huey1225 wrote:

    I plan on retiring at 62 (Nov 2015). I guess I don't understand why my spouses social Security would be affected after I die. Question 1 Yes I know my social security monthly payments will be lower. I will meet with Social Security in March 2015 to find out how much more. I do plan on continuing to work part time I understand you can earn $1150.00 per month plus your social security. That would be an increase in income for me. After reading all 5 of the reasons not to retire at 62 reason 3 holds me back will find out more in March 2015

  • Report this Comment On January 04, 2015, at 9:43 AM, Tulsaboyw wrote:

    Another item to remember.

    ON SS, even if you do retire before age 70..

    if you simply retire at 62 and put the $$ in the bank and dont live on it.... at age 70 you can re-apply to get the full SS you would get as if you waited till age 70 anyway.

    The trick is, that you have to pay back the 8 years of SS you got.. (and only that).. any $$ made or interest earned on it is yours anyway.

    My own dad did that and his net from that paid for a new car. Reality is though most people wont have that kind of excess $$.

  • Report this Comment On May 16, 2015, at 5:37 PM, orion7747 wrote:

    One big factor is if you have a spouse with a good retirement plan. My wife retired from her job as a teacher at 55. I can retire at 62 if I want from my (lower paying-private school) teaching job. I'm covered on her health plan for life. Lucky.

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Dan Caplinger

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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