Your Roadmap to Retire at 62: Planning for Financial Independence

Early retirement at age 62 is possible, but it demands thorough financial planning. Since 62 is when Social Security benefits become available and represents the threshold for early retirement dreams, many workers ask themselves this critical question: what does it actually take to retire at 62? The answer depends on your personal expenses, available income sources, and a clear withdrawal strategy. Before stepping away from the workforce, you’ll want to develop a comprehensive financial plan—ideally with professional guidance—to ensure your money lasts through three decades or more.

The Key Numbers You Need to Know to Retire at 62

Understanding the financial benchmarks is the foundation for planning to retire at 62. Fidelity’s widely-adopted 10x Rule provides a practical reference point: aim to have saved 10 times your annual salary by your full retirement age of 67. However, if you’re targeting early retirement at 62—five years ahead of schedule—you should plan to accumulate 14x your annual salary.

To illustrate: someone earning $115,000 yearly would need approximately $1.61 million set aside to retire at 62 using this guideline. While this figure might seem daunting, it reflects the extended timeline of your retirement. For those seeking to retire at 62, consider this a target to work toward during your peak earning years.

The 4% Rule offers another practical framework. This approach suggests you can sustainably withdraw 4% of your retirement savings in year one, then adjust that amount annually for inflation. If you had $1 million saved, you’d withdraw $40,000 in your first retirement year. In year two, assuming 3% inflation, you’d increase that to $41,200. This method assumes your portfolio will sustain you for approximately 30 years—a realistic timeframe for someone retiring at 62.

Social Security: The Early Claim Versus Delay Decision

Your Social Security strategy significantly impacts your overall retirement income. While you can begin claiming benefits at 62, doing so carries a permanent reduction in your monthly payments. If your full retirement age benefit would be $2,000 monthly, claiming at 62 could reduce this by up to 30%—leaving you with only $1,400 per month.

The alternative is more rewarding financially. Waiting until your full retirement age (67) restores you to 100% of your benefit. Delaying even further until 70 increases your payment by 8% annually, creating substantially higher lifetime income if you live into your 80s and beyond.

This decision becomes easier if you have alternative income sources to cover living expenses in your early 60s. Rental income, investment dividends, part-time work, or pension payments can bridge the gap, allowing you to delay Social Security and lock in higher lifetime payments. Those without these supplementary income sources may face a tougher tradeoff: claim early and live more comfortably now, or preserve resources and maximize later benefits.

Five Critical Factors When Planning to Retire at 62

The Healthcare Coverage Challenge

One of the most underestimated obstacles to retiring at 62 is healthcare. Medicare doesn’t begin until age 65, leaving a three-year gap you must manage independently. This period can be expensive and complicated.

Your options include purchasing coverage through the Affordable Care Act marketplace—though premiums may be substantial—or using a Health Savings Account (HSA) to set aside pre-tax dollars for medical expenses. Some early retirees bridge this gap by securing part-time work that includes employer health benefits.

Healthcare costs deserve serious attention in your budget. A 65-year-old who retired recently can expect to spend approximately $165,000 on healthcare throughout their remaining lifespan, according to Fidelity estimates. Planning for these costs upfront prevents financial shocks later.

Tax-Efficient Withdrawal Sequencing

How and when you withdraw money from different retirement accounts directly impacts your tax liability. Required Minimum Distributions (RMDs) don’t begin until age 73 for most retirees (or age 75 for those born after 1960), giving you years to strategize.

Withdrawal sequencing refers to the strategic order in which you tap different accounts. By withdrawing from taxable accounts first while delaying Social Security and Roth IRA withdrawals, you keep more money working in tax-advantaged environments longer. Roth IRA conversions—moving funds from traditional IRAs to Roth accounts—can also be valuable, though you’ll owe taxes on the converted amount in that year. The benefit comes later when those funds grow and can be withdrawn tax-free if specific conditions are met.

Longevity Planning and Investment Strategy

Since you may spend 25, 30, or more years in retirement, growth matters. Many retirees make the mistake of moving entirely into bonds and cash, which leaves them vulnerable to inflation over decades. Instead, a balanced approach maintains stock exposure—perhaps 50-60% of your portfolio—to generate long-term growth while managing volatility.

Key considerations include:

• Keeping a core emergency fund separate from investment portfolios
• Adjusting your withdrawal rate based on market performance (taking less during downturns, more during strong years)
• Accounting for inflation on housing, healthcare, and living expenses over your retirement span
• Rebalancing annually to maintain your target asset allocation

Income Diversification Beyond Savings

Personal savings tell only part of the story. Additional income sources reduce the burden on your portfolio. These might include:

• Pension payments from former employers (if available)
• Rental income from real estate investments
• Dividend-paying stocks and bonds that generate passive income
• Annuities that provide guaranteed monthly income
• Part-time work or consulting in your early 60s

Each income stream reduces the amount you need to withdraw from savings, extending your financial runway significantly.

Personal Lifestyle and Expense Realities

Your retirement lifestyle shapes everything. High travel and leisure spending requires larger reserves than a modest lifestyle focused on community activities and home life. Be honest about your priorities: what truly matters to you in retirement?

Building Your Retirement Budget: A Practical Approach

Creating a realistic budget is non-negotiable when planning to retire at 62. This exercise forces clarity about what your retirement will actually cost.

Step 1: Calculate Your True Retirement Expenses

List all anticipated monthly and annual expenses:

• Housing (mortgage or rent, property taxes, maintenance, utilities)
• Healthcare and insurance premiums (Medicare supplements after 65)
• Food, transportation, and household essentials
• Travel, hobbies, and entertainment
• Taxes on Social Security benefits and investment withdrawals
• Any debt payments or family support obligations

Many people underestimate their expenses initially. Track your current spending for several months to build a realistic baseline. Then adjust for retirement realities—you may spend more on travel and healthcare but less on work-related expenses.

Step 2: Optimize Your Savings and Investment Strategy

A diversified portfolio forms the backbone of retirement income. This typically means:

• Allocating a percentage to dividend-paying stocks for growth and income
• Maintaining bonds or fixed-income assets for stability and predictable cash flow
• Considering real estate or alternative investments if you have knowledge in those areas
• Reviewing your asset allocation annually and rebalancing to stay on target

The specifics depend on your risk tolerance and timeline. Those uncomfortable with stock market volatility might use annuities to lock in guaranteed income, trading growth potential for peace of mind. Others prefer maximum flexibility and growth potential, accepting market fluctuations as the tradeoff.

Making the Transition: Your Action Checklist

Planning to retire at 62 involves coordinating many moving parts. Before you hand in your resignation, verify you’ve addressed these critical steps:

1. Confirm your numbers: Calculate your target retirement savings using the 10x Rule benchmark or consult a financial advisor for a personalized projection.
2. Map your Social Security strategy: Decide whether claiming at 62 aligns with your other income sources, or if delaying makes more sense for your situation.
3. Solve for healthcare: Research ACA marketplace plans, HSA options, or part-time employment to cover the three years before Medicare eligibility.
4. Plan your tax approach: Work with a tax professional to design a withdrawal sequence that minimizes your tax burden across all account types.
5. Build your budget: Document realistic monthly and annual expenses, including inflation adjustments and unexpected-expense reserves.
6. Diversify your income: Identify all available income sources—Social Security, pensions, rental income, investments—and model how they work together.

The Bottom Line on Retiring at 62

Retiring at 62 is achievable with disciplined planning. The specific amount you need depends on your lifestyle, anticipated expenses, and the income sources available to you. Some retirees lean heavily on Social Security and pensions, while others require substantial personal savings and investment income to fill the gap.

The common thread across all successful early retirements: a realistic financial plan developed well before your target retirement date. Whether you work with a financial advisor or manage the process independently, understanding your numbers, your options, and your priorities positions you to make confident decisions about this major life transition. Start planning now, review your assumptions annually, and adjust course as circumstances evolve.