5 Things You Need to Know Before Retiring at 62

Early retirement comes with trade-offs — here’s what to consider before you leave work behind

Donna Fuscaldo and Aaron Kassraie,

Updated May 15, 2026

AARP

Comments

En español

Updated May 15, 2026

A silhouette of a man runs from a clock toward a door with a beach on the other side

AARP (Source: Shutterstock(2))

Key takeaways

Retiring at 62 can be planned or forced, but either way it reshapes finances, health coverage and daily life.
Decisions you make in the moment, especially those concerning income and benefits, can have late-blooming, long-term effects.
Longer lifespans and ongoing cost pressures mean early retirement requires careful, long-range planning.

Many Americans consider retiring at 62 because it’s the earliest age to claim Social Security benefits. But for some, retirement timing isn’t a choice.

About 4 in 10 retirees leave the workforce earlier than planned, according to a 2025 survey by the Employee Benefit Research Institute and Greenwald Research, often because of health problems or changes at their workplace.

Retiring early can have lasting effects on income, health coverage and long-term financial security that many who stop working don’t see coming until it’s too late. That’s especially true for those who are forced into retirement. Workers ages 55 to 64 who lose a job are less likely than younger workers to find new employment and more likely to exit the workforce by retiring, according to a 2025 Government Accountability Office review of federal labor data.

If you’re among those mulling early retirement, remember that forgoing the full-time grind means forgoing a full-time income too. Here are five things to think about and plan for to help you make it work.

1. You can’t sign up for Medicare yet

Why it matters: Retiring at 62 means finding and paying for health coverage until Medicare begins.

Tens of millions of retirees rely on Medicare to cover most of their health costs. But most people don’t become eligible for Medicare until they turn 65. If you leave your job — and your group health insurance — before then, you’ll need to find some other way to get coverage, and it will likely cost more than your subsidized plan at work.

“Covered employees are used to paying premiums through their paychecks and getting more attractive rates,” says Rob Williams, a certified financial planner in Denver and the former managing director of the Schwab Center for Financial Research. “That may not be the case in the private market. But if you retire, you need some other bridge to Medicare for health care coverage.”

What you can do: You have options for building that bridge, but you’ll want to determine the cost and factor it into your retirement budget, Williams says.

You may be able to maintain your workplace health plan under COBRA, a federal law that requires workplaces with 20 or more employees to offer temporary continuing coverage if you lose your job. But, unlike in your working days, you will likely have to pay the full monthly premium.

Getting coverage through the Affordable Care Act marketplace is another option. ACA insurers are required to cover preexisting conditions and provide several types of preventive care, including many vaccines, with no out-of-pocket cost.

People with limited incomes can get reduced premiums on ACA plans. People with very low incomes may qualify for Medicaid; in most states, the threshold is 138 percent of the federal poverty level, or $22,025 for an individual and $29,863 for a couple in 2026.

If you don’t qualify for Medicaid and can’t afford a private health plan, you may be able to get needed medical care at a community health center. There are more than 1,400 health centers and 16,200 service sites nationwide, charging fees on a sliding scale based on your income. The federal Health Resources & Services Administration has an online tool you can use to find one near you.

2. You can claim Social Security, but you’ll get less

What it means: Claiming retirement benefits early permanently reduces your monthly payment.

Many people retire at 62 because that’s the earliest age you can collect Social Security retirement benefits. But just because you can claim monthly benefits at 62 doesn’t always mean you should.

Social Security pays 100 percent of the benefit calculated from your lifetime earnings history if you claim it at full retirement age, which is 67 for people born in 1960 and later. If you start earlier, your benefit is permanently reduced by up to 30 percent. On the other hand, if you wait past FRA, you get a benefit boost — 8 percent for each year you delay, up to age 70.

Filing early may be necessary if you are in poor health or need the money to get by, Williams says, but otherwise, “I suggest everyone consider waiting if they can.”

What you can do: Like switching from full-time to part-time work, taking Social Security benefits as part of your early retirement is effectively accepting reduced pay. Before you decide, assess your overall income picture. Will other sources of money, such as your savings or a pension, help you cover that gap over a lengthy retirement? How would your decision affect Social Security options for your spouse?

“Run through the scenarios,” Williams advises. “That Social Security decision is a very important one.”

3. Retirement is expensive

What to plan for: Inflation doesn’t stop when paychecks do.

Since early 2020, overall consumer prices have risen by roughly 25 percent, and housing costs are up more than 20 percent, according to Consumer Price Index data. Interest rates on credit cards, loans and mortgages remain elevated, and home insurance and auto insurance premiums are still climbing. Those things don’t suddenly cost less when you retire.

Inflation hit a 40-year high in 2022, but Americans under 50 have spent most of their lives in a period of relative price stability and may not be bracing for another spike, or accounting for the toll slow but steady increases could take on their future finances.

Are You Saving Enough?

Use AARP's Retirement Calculator to find out when — and how — to retire the way you want.

Even when early retirement isn’t planned, it can collide with financial assumptions that don’t hold up over time, especially those concerning inflation.

“The surveys that are showing people’s expectations of an early retirement going up might be more a result of society’s lack of experience with inflation,” says Chris Manske, president of Manske Wealth Management in Houston.

“Just because you can transition to a fixed income at today’s prices doesn’t mean you’ll be comfortable after 10 or 20 years of prices going up,” he says.

What you can do: Factor in the potential impact of inflation in calculating your retirement budget. The Federal Reserve’s inflation target is 2 percent, and the rate ranged from 2 to 3 percent throughout 2025. Try increasing your savings rate by 2 or 3 percent so your nest egg can keep up.

“You need to know before you retire what your lifestyle will look like with inflation,” Manske says.

4. You might miss work more than you think

Beyond the paycheck: Purpose, structure and social connection matter.

Working isn’t only about bringing home a paycheck. It can also enrich your life with social ties and a sense of purpose. Transitioning into a life of ease may be difficult, particularly if you do so relatively young.

“Many people don’t know what to do with their time,” Williams says. “Many people retire and hate it.”

What you can do: Retirement planning isn’t just about saving money. It’s about what your life will be like too. Do you intend to work part-time or freelance? Travel the world? Pick up that hobby you’ve long thought about? Prepare to fulfill your aspirations, whatever they are.

Say you want to do consulting work after leaving full-time employment. Develop the skills and the network you’ll need before you take the plunge. If travel is your goal, determine how much that will cost and whether you can afford it.

“It doesn’t happen on its own,” Williams says. “You have to be open to planning for that.”

5. You might live longer than you think

Why it matters: Your savings may need to last decades.

Some people retire early for fear that if they wait too long to stop working, they won’t have enough time to do what they want. That may be true for some, but on average, an American who reaches 62 is projected to live an additional 20-plus years (20 years for a man and 23 for a woman), according to Social Security’s life expectancy tables.

“A lot of the population is living much longer than in the past,” says Alicia Munnell, a senior adviser at Boston College’s Center for Retirement Research. That means “many will be supporting themselves for a long time in retirement.”

What you can do: To guard against the prospect of outliving your money, plan for 20-plus years of retirement. Check that your savings are sufficient to supplement your fixed income. Be sure to factor in health care expenses: Investment company Fidelity estimates that the average 65-year-old will need $172,500 in after-tax savings to cover out-of-pocket costs over the course of retirement.

If the numbers don’t add up, you may want to consider putting off retirement. Working even one more year can have a big impact.

“In my view, working longer is the most important thing you can do to have a secure retirement,” Munnell says.

“It gives you higher monthly Social Security benefits, allows you to wait to go on Medicare for health insurance, allows your 401(k) to build if you have that, allows you time to pay off your mortgage on your house and reduces the number of years you have to support yourself with your accumulated retirement assets,” she says.

Common questions about retiring at 62

Is retiring at 62 a good idea for most people?

For a lot of retirees, 62 isn’t a carefully chosen milestone; it’s where they land after a health issue, a layoff or other workplace change. That’s why the decisions you make when retiring early carry extra weight.

Most people won’t qualify for Medicare until age 65, so they need to cover health insurance for three years.

Additionally, claiming Social Security at 62 permanently lowers monthly payments by as much as 30 percent. And because people are living longer, savings must stretch further.

What makes 62 a complicated milestone is that for many people, it’s less a choice than a landing spot. Surveys show that a significant share of retirees leave the workforce earlier than planned, often because of health problems or job changes, not because they feel ready. Here are three key things to know if you find yourself among them.

What happens to Social Security if you retire at 62?

Social Security starts when you claim benefits, not when you stop working. Retiring itself doesn’t lock you into a lower benefit — you can wait and claim benefits later to get a bigger payment. Waiting until age 70 gets you your maximum payment.

How do people cover health insurance before Medicare?

People who retire before turning 65 have a few ways to bridge the gap to Medicare:

COBRA. This federal program may let you stay on your former employer’s plan for 18 to 36 months. However, you’ll almost certainly pay the full premium yourself, plus possible administrative fees of up to 2 percent, which can add up quickly.
The Health Insurance Marketplace at HealthCare.gov. Losing job-based coverage triggers an ACA Special Enrollment Period, meaning you can get a plan outside the regular sign-up window (Nov. 1 to Jan. 15 in most states). Depending on your income, you may qualify for premium tax credits that bring the cost down or be referred to your state’s Medicaid program.
Your spouse’s plan. If your spouse is still working, joining their employer plan is often the most straightforward and affordable option.

Can you work or earn income after retiring at 62?

“Retiring” at 62 doesn’t mean you have to stop earning. You can work and collect Social Security at the same time, but if you haven’t yet reached FRA, there’s a catch — Social Security’s earnings test may temporarily reduce your benefits if your wages or net self-employment income exceed a certain level.

That threshold is adjusted annually; in 2026, it’s $24,480 for most affected beneficiaries. Earn more than that and Social Security will withhold $1 in benefits for every $2 you earn above the limit.

In the year you reach FRA, a higher limit applies ($65,160 in 2026), and Social Security withholds less ($1 for every $3 in income over the cap).

Only earnings before the month you hit FRA count toward it, and once you pass that milestone, the earnings test goes away — and you can earn as much as you want without any effect on your benefit. Also, Social Security adjusts your monthly payment so that over time you recoup what was withheld.

%{postComment}%

The key takeaways were created with the assistance of generative AI. An AARP editor reviewed and refined the content for accuracy and clarity.

Donna Fuscaldo is a contributing writer and editor focusing on personal finance and health. She has spent over two decades writing and covering news for several national publications including The Wall Street Journal, Forbes, Investopedia and HerMoney.

Aaron Kassraie writes about issues important to military veterans and their families for AARP. He also serves as a general assignment reporter. Kassraie previously covered U.S. foreign policy as a correspondent for the Kuwait News Agency’s Washington bureau and worked in news gathering for USA Today and Al Jazeera English.